Keating & Partners is a law firm specializing in labour relations and employee-related work. It employs 25
Keating & Partners is a law firm specializing in labour relations and employee-related work. It employs 25 professionals (5 partners and 20 managers) who work directly with its clients. The average budgeted total compensation per professional for 2016 is $104,000. Each professional is budgeted to have 1,600 billable hours to clients in 2016. Keating is a highly respected firm, and all professionals work for clients to their maximum 1,600 billable hours available. All professional labour costs are included in a single direct cost category and are traced to jobs on a per-hour basis.
All costs of Keating & Partners other than professional labour costs are included in a single indirect cost pool (legal support) and are allocated to jobs using professional labour-hours as the allocation base. The budgeted level of indirect costs in 2016 is $2.2 million.
1. Compute the 2016 budgeted professional labour-hour direct cost rate.
2. Compute the 2016 budgeted indirect cost rate per hour of professional labour.
3. Keating & Partners is considering bidding on two jobs:
a. Litigation work for Richardson Inc. that requires 100 budgeted hours of professional labour.
b. Labour contract work for Punch Inc. that requires 150 budgeted hours of professional labour. Prepare a cost estimate for each job.
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