Law Services Inc. provides a variety of legal services to its clients. The firm's attorneys
each have the authority to negotiate billing rates with their clients. Law Services wants
to manage its operations more effectively, and established a budget at the beginning of
last year. The budget included total hours billed, amount billed per hour, and variable
expense per hour. Unfortunately, the firm failed to meet its budgeted goals for last year.
The results are shown below.
Total hours billed
Actual Budget
5,700 6,000
Amount billed/hour
$275 $325
The budgeted variable expense per hour is $50, and the actual total variable expense
was $285,000. There is disagreement among the attorneys over the reasons that the
firm failed to meet its budgeted goals.
