The Law Firm of Smith & Jones Has a Staff

question 168

Multiple Choice

The law firm of Smith & Jones has a staff of 30 lawyers and administrative staff.Budgeted total costs of the firm total $4,000,000 of which $2,500,000 is direct-labor costs.Assuming that the remaining costs are indirect and direct-labor cost is the allocation base,calculate the budgeted indirect cost rate.

• A) 38 of direct-labor cost
• B) 60% of direct-labor cost
• C) 63% of direct-labor cost
• D) 160% of direct-labor cost

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Definitions:

Functional Departmentation

Employees with closely related skills and responsibilities are assigned to the same department.

Product Departmentation

Departments are formed on the basis of a particular product, product line, or service.

Coordination Problems

Difficulties that arise in the process of organizing people or groups to allow for harmonious action or function.

High Differentiation

describes an organization with a complex structure where different units or departments specialize in particular tasks or functions, often resulting in a variety of perspectives and approaches.