Casey Associates is a recently formed law partnership. Ellery Hanley, the managing partner of Casey Associates, has just finished a tense phone call with Martin Offiah, president of Lapidus Bakery. Offiah strongly complained about the price Casey charged for some legal work done for Lapidus Bakery. Hanley also received a phone call from its only other client, Ramsey's Deli, which was very pleased with both the quality of the work and the price charged on its most recent job. Casey Associates operates at capacity and uses a cost-based approach to pricing (billing) each job. Currently it uses a simple costing system with a single direct-cost category (professional labor-hours) and a single indirect-cost pool (general support). Indirect costs are allocated to cases on the basis of professional labor-hours per case. The job files show the following:

	Lapidus Bakery	Ramsey's Deli
Professional labor	104 hours	96 hours

Professional labor costs at Casey Associates are $62 an hour. Indirect costs are allocated to cases at $105 an hour. Total indirect costs in the most recent period were $21,000.

Required

1.	Why is it important for Casey Associates to understand the costs associated with individual jobs?
2.	Compute the costs of the Lapidus Bakery and Ramsey's Deli jobs using Casey's simple costing system.