A law firm uses activity-based pricing. The company's annual activity pools and related information are as follows: Estimated Cost Driver Cost Driver Number of consultations Cost Pool Quantity Consultation consultations Administrative costs Client service $125.000 66.000 34.000 Admin labor hours Number of clients 200 6.000 labor hours 400 clients The pricing structure is to charge customers for the cost of the services that are provided. The firm had two consultations with Randall's Auto Shop and required 64 administrative labor hours. What additional costs will be charged to this customer? $1.442 $1,954 $721 $2.039

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A law firm uses activity-based pricing. The company's annual activity pools and related information are as follows:
Cost Pool
Estimated Cost
Cost Driver
Driver
Quantity
Consultation
consultations
Administrative costs
Client service
$125.000
$1.442
$1,954
5721
$2.039
66,000
34.000
Number of consultations
Admin labor hours
Number of clients
200
6.000 labor hours
400 clients
The pricing structure is to charge customers for the cost of the services that are provided. The firm had two consultations with Randall's Auto Shop and required
64 administrative labor hours. What additional costs will be charged to this customer?
Transcribed Image Text:A law firm uses activity-based pricing. The company's annual activity pools and related information are as follows: Cost Pool Estimated Cost Cost Driver Driver Quantity Consultation consultations Administrative costs Client service $125.000 $1.442 $1,954 5721 $2.039 66,000 34.000 Number of consultations Admin labor hours Number of clients 200 6.000 labor hours 400 clients The pricing structure is to charge customers for the cost of the services that are provided. The firm had two consultations with Randall's Auto Shop and required 64 administrative labor hours. What additional costs will be charged to this customer?
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