Gallagher Associates a law firm hires Attorney Mary Nault at

Gallagher Associates, a law firm, hires Attorney Mary Nault at an annual salary of $149,500. The law firm expects her to spend 2,300 hours a year performing legal work for clients. Indirect costs are assigned to clients based on attormey billing hours. Firm attorneys are expected to work a total of 24,000 direct labor hours this year. Before the fiscal year begins, Gallagher estimates that the total indirect costs for the upcoming year will be S1,080,000 Requirements 1. What would be the hourly (cost) rate to Gallagher Associates of employing Nault? 2. If Nault works on Client 367 for 17 hours, what direct labor cost would be traced to Client 367 3. What is the indirect cost allocation rate? 4. What indirect costs will be allocated to Client 367? 5. What is the total job cost for Client 367? 67? Print Done hoose from any list or enter any number in the input fields and then click Check Answer 2

Solution

Answer:

1) Hourly Cost = $149500/2300 = $65

2) Per-unit hour of direct labor cost = $149500/24000 = $6.23

Therefore, Client 367 direct labor cost for 17 hours = $6.23 * 17 = $105.90

3) Indirect Cost = $108000/24000 = $45

4) Indirect Cost allocation to Client 367 for 17 hours = $45 * 17 = $765

5) Total job Cost for Client 367 = Direct job cost + Indirect Job Cost = $105.9+$765 = $870.9