Reference no: EM132549115
Question 1) 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
Option 1: $27,000
Option 2: $32,000
Option 3: $34,800
Option 4: $37,400
Question 2) 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%.
a) If the stand-alone method were used to allocate the common cost, what amount of cost would be allocated to the TSLA Corporation?
Group of answer choices
Option 1: $336,000
Option 2: $400,000
Option 3: $84,000
Option 4: $320,000
2b) 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
Option 1: $20,000
Option 2: $100,000
Option 3: $80,000
Option 4: $84,000