Tharp and Kostrivas is a law firm that is initiating an activity-based costing s
ID: 2428242 • Letter: T
Question
Tharp and Kostrivas is a law firm that is initiating an activity-based costing system. Ben Tharp, the senior partner and strong supporter of ABC, has prepared the following list of activities performed by a typical attorney in a day at the firm. Classify each of the activities listed by Ben Tharp as value-added or non-value-added and defend your classification. How much was value-added and how much was non-value-added?
Activities Hours
Writing contracts and letters 1.0
Attending staff meetings 0.5
Taking depositions 1.0
Doing research 1.0
Traveling to/from court 1.0
Contemplating legal strategy 1.0
Eating lunch 1.0
Litigating a case in course 2.5
Entertaining a prospective client 2.0
Answer Below:
Value-Added Activities
Non-Value-Added Activities
Questionable Classifications
Explanation / Answer
Value-Added Activities
Hours
Writing contracts and letters
1
Taking depositions
1
Contemplating legal strategy
1
Litigating a case in court
2.5
5.5
Non-Value-Added Activities
Hours
Attending staff meetings
0.5
Doing research
1
Traveling to/from court
1
Eating lunch
1
Entertaining a prospective client
2
5.5
Questionable Classifications:
Writing contracts is value-added; writing letters may be value-added if related to a specific case or it may be non-value-added if it is billing a client or collecting receivables. Research may be value-added if it is unique, related to a specific case, and is billable. Research may be non-value-added if it is something the attorney should already have known and is not billable to the client.
Value-Added Activities
Hours
Writing contracts and letters
1
Taking depositions
1
Contemplating legal strategy
1
Litigating a case in court
2.5
5.5
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