The Barton Creek Company Has Three Client-Contact Departments: Market Research

question 69

Essay

The Barton Creek Company has three client-contact departments: Market Research, Branding, and Promotion. Each department requires the services of the Legal Department for the contracts that each undertakes. The size of the Legal Department was based on long-run estimates of contracts. Information on the Legal Department's budgeted and actual costs is as follows:
The budget for the Legal Department is $200,000 + $7.50/contract. The budgeted volume of contracts is as follows:
$$\begin{array} { | l | r |} \hline \text { Market Research } & 300 \\\hline \text { Branding } & 500 \\\hline \text { Promotion } & 700 \\\hline\end{array}$$
The actual number of contracts for Market Research was 286, for Branding was 450, and for Promotion was 675.
Required:
(Use three decimal places in your calculations.)
a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal Department would be allocated to each of the producing departments?
b. If a dual charging rate is used, how much of the cost of the Legal Department would be allocated to each of the producing departments?

Understand the importance of assumptions in economic modeling and their potential limitations.

Identify key factors of production and their roles.

Describe the concept of comparative and absolute advantages in trade.

Understand the role of economists and economic institutions in policy making and analysis.

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Definitions:

Long-Term Fundraising

Long-term fundraising involves strategies and efforts planned over an extended period to secure resources or capital for an organization or project's future needs.

Build Institutions

The process of establishing and developing structures or organizations that play a foundational role in society, such as schools, banks, and legal systems.

Philanthropy

The desire to promote the welfare of others, expressed especially by the generous donation of money to good causes.

Charity

An organization set up to provide help and raise money for those in need, focusing on public benefit.