Financial Accounting Smith and Baker Legal Services employs 4 full-time attorneys and8 paraprofessionals. Budgeted salaries are $100,000 for eachattorney and $50,000 for each paraprofessional. Budgeted indirectcosts (e.g., rent, secretarial support, copying, etc.) are $320,000.The company traces the cost of attorney and paraprofessionaltime to each client and uses the total to assign indirect costs.What amount of indirect cost would be assigned if services to aclient required $32,000 of attorney cost and $27,000 ofparaprofessional cost?

Step 1: Define Allocating Overhead in a Professional FirmA professional practice uses predetermined…

Answered: Smith and Baker Legal Services employs…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 6EB: Sanchez & Vukmin, LLP, is a full-service accounting firm located near Chicago, Illinois. Last year,...

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Winken, Blinken, and Nod is a law firm specializing in real estate litigation. In addition to the three partners, the firm employs nine associates who work directly with clients. The average budgeted compensation for the twelve professionals is $299,040. Each lawyer is budgeted at 1,680 billable hours per year. All professional labor costs are included in a single direct cost pool and are traced to jobs on a per-hour basis. All non-professional labor costs are included in a single overhead cost pool and are allocated to jobs using professional labor hours as the allocation base. Budgeted overhead costs total $2,016,000. The firm is considering bidding on some work with a local university. The job is expected to require 190 hours of professional labor. Required: a. Compute the budgeted direct cost rate per hour of professional labor. b. Compute the budgeted (that is, predetermined) overhead cost rate per hour of professional labor. c. Compute the budgeted cost for the university job.…
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