Service industry, job costing, two direct- and two indirect-cost categories, law firm. Keating has just completed a review of its job-costing system. This review included a detailed analysis of how past jobs used the firm’s resources and interviews with personnel about what factors drive the level of indirect costs. Management concluded that a system with two direct-cost categories (professional partner labor and professional associate labor) and two indirect-cost categories (general support and secretarial support) would yield more-accurate job costs. Budgeted information for 2008 related to the two direct-cost categories is as follows:

Budgeted information for 2008 relating to the two indirect-cost categories is

1. Compute the 2008 budgeted direct-cost rates for (a) professional partners and (b) professional associates.

2. Compute the 2008 budgeted indirect-cost rates for (a) general support and (b) secretarial support.

3. Compute the budgeted costs for the Richardson and Punch jobs, given the following information:

4. Comment on the results in requirement 3. Why are the job costs different from those computed in Problem 4-32?

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Professional Partner Labor Professional Associate Labor 20 1,600 per year Number of professionals Hours of billable time per professional Total compensation (average per professional) 1,600 per year $200,000 S80,000