Sunshine Law Firm\'s policy is to bill its clients an amount equal to the total

Question

Sunshine Law Firm's policy is to bill its clients an amount equal to the total job cost plus a 30% profit markup over cost. The total job cost equals the sum of the professional labor costs traced to the job plus the indirect costs allocated to the job. The cost of professional labor time is $150 per hour. Indirect costs are allocated to a job based on professional labor hours spent on the job. At the start of the year, Sunshine estimated that its four attorneys would spend a total of 8,000 professional h?urs working on client jobs, and estimated that total indirect costs would be $320,000. During the year, Jake hired Sunshine to draft a sales contract for some real estate that Jake owned. Sunshine's attorneys worked on the project for 20 hours. How much will Sunshine bill Jake for its legal services? $3,800 $3,940 $4,800 $4,940 None of the above

Explanation / Answer

Cost of professional labor time $ 3,000 Overheads charged $     800 Costs before markup $ 3,800 Add: Markup @ 30% $ 1,140 Bill for service $ 4,940

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