Question

Metlife Law Office employ 12 full-time attorneys and 5 paraprofessionals. Budgeted variable costs include $100,000 for each attorney and $30,000 per paraprofessional. For 2001, fixed costs were budgeted at $250,000, but actually amounted to $300,000. Actual variable costs were $110,000 for each attorney and $30,000 for each paraprofessional.
Variable and fixed costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours (a single rate method). Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.

How much should the client be billed in a normal costing system which uses budgeted rate and cost allocations are based on actual data, when 1,000 professional labor-hours were used?

Group of answer choices:

$27,000

$32,000

$34,800

$37,400

The TSLA Corporation currently uses a manufacturing facility costing $400,000 per year; 80% of the facility's capacity is currently being used. A start-up business has proposed a plan that would utilize the other 20% of the facility and increase the overall costs of maintaining the space by 5%.

If the stand-alone method were used to allocate the common cost, what amount of cost would be allocated to the TSLA Corporation?

Answer choices:

$336,000

$400,000

$84,000

$320,000

The TSLA Corporation currently uses a manufacturing facility costing $400,000 per year; 80% of the facility's capacity is currently being used. A start-up business has proposed a plan that would utilize the other 20% of the facility and increase the overall costs of maintaining the space by 5%.

If the incremental method were used to allocate the common cost, what amount of cost would be allocated to the start-up business?

Group of answer choices:

$20,000

$100,000

$80,000

$84,000

Answer 1