Keating & Associates is a firm specializing labor relations and employee-reated work. It employs 25 professionals who work directy with its clients. The average budgeted total compensation per professional for 2011 is $104,000. Each professional is bugeted to have 1,600 billable hours to clients in 2011. All professionals work for clients to their maximum 1,600 billable hours available. All professional labor costs are included in a single direct-cost category and are traced to jobs on a per-hour basis. All costs of Keating & Associates other than professional labor costs are inlcuded in a single indirect-cost pool (legal support) and are allocaed to jobs using professional labor-hours as the allocation base. The budgeted of indirect costs in 2011 is $2,200,000.
1. Prepare an overview diagram of Keating's job-costing system.
2. Compute the 2011 bugeted direct-cost rate per hour of professional labor.
3. Compute the 2011 budgeted indirect-cost rate per hour of professional labor.
4. Keating & Associates is considering bidding on two jobs:
a. Litigation work for Richardson, Inc,. which requires 100 budgeted hours of professionals labor.
b. Labor contract work for Punch, Inc., which requires 150 budgeted hours of professional labor. Prepare a cost estimate for each job.