A client, Shirlee James, requires 10 partner labor hours and 25 professional associate hours from O'Reilly and Shriberg, the law firm in E9-6.
The partners of O'Reilly and Shriberg, attorneys-at-law, decide to implement an activity based costing system for their firm. They identify the following three cost pools and budgeted amounts for each for the coming year: fringe benefits, $450,000; paralegal support, $250,000; and research support, $650,000. It is determined that the best cost driver for fringe benefits is professional labor dollars ($1,500,000); paralegal support is partner labor hours (4,000); and research support is professional labor hours (20,000).
Compute the budgeted overhead rates for each of the three cost pools.
Partners are paid $125 per hour, and associates make $60 per hour.
Compute the job cost of servicing Shirlee James.