A Busy Law Office Has a Central Administration Set Up

Multiple Choice

A busy law office has a central administration set up, with the administration work for all lawyers shared by the clerical staff.Clients are billed at the firm's hourly rate by the firm.The arrangement is that whenever there is administration work to be done, it is assigned to whoever is available at the time.One of the lawyers has complained that she hardly ever uses the administration services, and so her year end bonus should be larger than those who require the administration services.Therefore they are considering tracking the administration work done for each lawyer separately so that they know how many hours of administration services is being used by each lawyer.At the end of the year, the bonus of each lawyer would be reduced by a charge reflecting the administration services she/he used in the year.If the firm institutes this new approach, this will mean that

A) there will be no more cross subsidization.
B) there will still be cross-subsidization between lawyers but not between their clients.
C) the new information gathered will enable the firm to be able to reduce its costs.
D) there will still be cross-subsidization between clients but not between lawyers.
E) they will be using a departmental costing system.