A law firm uses activity-based pricing. The company's annual activity pools and related information are as follows: Estimated Cost Driver Cost Driver Number of consultations Cost Pool Quantity Consultation consultations Administrative costs Client service $125.000 66.000 34.000 Admin labor hours Number of clients 200 6.000 labor hours 400 clients The pricing structure is to charge customers for the cost of the services that are provided. The firm had two consultations with Randall's Auto Shop and required 64 administrative labor hours. What additional costs will be charged to this customer? $1.442 $1,954 $721 $2.039
A law firm uses activity-based pricing. The company's annual activity pools and related information are as follows: Estimated Cost Driver Cost Driver Number of consultations Cost Pool Quantity Consultation consultations Administrative costs Client service $125.000 66.000 34.000 Admin labor hours Number of clients 200 6.000 labor hours 400 clients The pricing structure is to charge customers for the cost of the services that are provided. The firm had two consultations with Randall's Auto Shop and required 64 administrative labor hours. What additional costs will be charged to this customer? $1.442 $1,954 $721 $2.039
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...
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![A law firm uses activity-based pricing. The company's annual activity pools and related information are as follows:
Cost Pool
Estimated Cost
Cost Driver
Driver
Quantity
Consultation
consultations
Administrative costs
Client service
$125.000
$1.442
$1,954
5721
$2.039
66,000
34.000
Number of consultations
Admin labor hours
Number of clients
200
6.000 labor hours
400 clients
The pricing structure is to charge customers for the cost of the services that are provided. The firm had two consultations with Randall's Auto Shop and required
64 administrative labor hours. What additional costs will be charged to this customer?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5cd02553-359c-4999-a7d7-a20833a46cf4%2F07d64ed4-6933-41ea-a1d8-14c2328721b8%2Fh66ajao_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A law firm uses activity-based pricing. The company's annual activity pools and related information are as follows:
Cost Pool
Estimated Cost
Cost Driver
Driver
Quantity
Consultation
consultations
Administrative costs
Client service
$125.000
$1.442
$1,954
5721
$2.039
66,000
34.000
Number of consultations
Admin labor hours
Number of clients
200
6.000 labor hours
400 clients
The pricing structure is to charge customers for the cost of the services that are provided. The firm had two consultations with Randall's Auto Shop and required
64 administrative labor hours. What additional costs will be charged to this customer?
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