Question

A centralized legal department of exline company has expenses of $500,000. the department has provided a total of 2,000 hours of service for the period. the northern region has used 575 hours of legal service and the southern region has used 1,425 hours of legal service during the period. how much should the southern region be charged for legal services?

Answer 1

The southern region must be charged $3,56,250 for legal services.

We follow these steps to arrive at the answer.

Total Legal Expenses = $500,000

Total hours of service = 2,000 hrs

Legal Expense/per hour = $250 (Total Legal Expenses / Total Hours of service)

No. of legal hours used by the southern department = 1,425 hours

Legal Expense charged to the southern department = 1,425 × $250