LaPlatt & Associates is an accounting firm that provides audit, tax, and accounting services to medium-size retail companies. It employs 50 professionals (10 partners and 40 associates) who work directly with clients. The aver-age expected total compensation per professional for the year is $120,000.The services of LaPlatt are in high demand, and each professional works for clients to their maximum of 1,600 billable hours. All professional salaries are traced to individual client service summaries. All costs other than professional salaries are included in a single indirect cost pool (professional support).The indirect costs are assigned to service summaries using professional hours as the allocation base. The expected amount of indirect costs for the year is $5,200,000.

a. Compute the budgeted indirect cost rate per hour of professional service.
b. LaPlatt & Associates is bidding on tax and audit services for a potential client that are expected to require 100 hours of professional service time. Calculate the estimated cost of the work using average professional wage rates and basing indirect costs on estimated service time

  • CreatedSeptember 12, 2013
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