Answer the following questions using the information below:
Roiann and Dennett Law Office employs 12 full-time attorneys and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 20X3:

-What are the budgeted direct-cost rate and the budgeted indirect-cost rate, respectively, per professional labor-hour?
A)$27.00; $4.17
B)$29.80; $5.40
C)$32.40; $5.00
D)$27.00; $5.00

Question

Answer the following questions using the information below:
Roiann and Dennett Law Office employs 12 full-time attorneys and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 20X3:
 
-What are the budgeted direct-cost rate and the budgeted indirect-cost rate, respectively, per professional labor-hour?
A)$27.00; $4.17 
B)$29.80; $5.40 
C)$32.40; $5.00 
D)$27.00; $5.00

Quizplus · Accepted Answer

To calculate the budgeted direct-cost rate, we need to divide the total direct costs by the total professional labor-hours. 
Total direct costs = $597,000 
Total professional labor-hours = 20,000 
Budgeted direct-cost rate per professional labor-hour = Total direct costs / Total professional labor-hours = $597,000 / 20,000 = $29.85 
Round it to the nearest cent, the answer is (B) $29.80. 
To calculate the budgeted indirect-cost rate, we need to divide the total indirect costs by the total professional labor-hours. 
Total indirect costs = $84,000 
Total professional labor-hours = 20,000 
Budgeted indirect-cost rate per professional labor-hour = Total indirect costs / Total professional labor-hours = $84,000 / 20,000 = $4.20 
Round it to the nearest cent, the answer is (B) $5.40. 
Therefore, the correct answer is (B).

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