A lawyer allocates overhead costs based on her hours working with different clients. The lawyer expects to

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A lawyer allocates overhead costs based on her hours working with different clients.

The lawyer expects to have \($200,000\) in overhead during the year and expects to work on clients’ cases 2,000 hours during the year. In addition, she wants to pay herself \($50\) per hour for working with clients. The lawyer, however, does not bill all clients based on covering overhead costs and her own salary. Some clients pay her on contingency fees. If the lawyer works with a client on a contingency-fee basis, the lawyer receives half of any settlement for her client. During the year, the lawyer works 1,200 hours that are billable to clients. The remaining hours are worked on a contingency basis. The lawyer wins \($300,000\) in settlements for clients of which she receives half. The actual overhead was \($210,000\).

What does the lawyer earn during the year after expenses?

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Management Accounting In A Dynamic Environment

ISBN: 9780415839020

1st Edition

Authors: Cheryl S McWatters, Jerold L Zimmerman

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