4-35	JOB COSTING WITH TWO DIRECT COST AND TWO INDIRECT COST CATEGORIES, LAW FIRM
	Keating has just completed a review of its job-costing system. This review included a detailed analysis of how past jobs used the firms resources and interviews with personnel about what factors drive the level of indirect costs. Management concluded that a system with two direct cost categories (professional partner labour and professional manager labour) and two indirect cost categories (general support and administration support) would yield more accurate job costs. Budgeted information for 2019 related to the two direct cost categories is as follows:
						Professional Partner Labour			Professional Manager Labour
	Number of professionals					5			20
	Hours of billable time per professional					1,600 per year			1,600 per year
	Total compensation (average per professional)					$200,000			$80,000
	Budgeted information for 2019 relating to the two indirect cost categories is
						General Support			Administration Support
	Total costs					$1,800,000			$400,000
	Cost allocation base					Professional labour-hours			Partner labour-hours
	Required
1	Compute the 2019 budgeted direct cost rates for (a) professional partners and (b) professional managers.
2	Compute the 2019 budgeted indirect cost rates for (a) general support and (b) administration support.
3	Compute the budgeted job costs for the Richardson and Punch jobs, given the following information:
						General Support			Administration Support
	Professional partners					60 hours			30 hours
	Professional managers					40 hours			120 hours
4	Comment on the results in requirement 3. Why are the job costs different from those computed in Problem 4-34?