2-27 Variable and fixed costs. Accounting firm Weetman, Doemen, & Co conducts a variety of activities for small and medium (SM) firms. The number of employees on January 1, 2009, was 25. Due to frequent mergers and acquisitions, a lot of SM firms are taken over. The consequence of this is that the accountant of the larger firm also provides services to the merged SM firm. As Weetman, Doemen, & Co's clients consist mainly of SM firms, business has decreased. The acquisition of new clients and/or increasing business with existing clients hasn't had any results. Weetman, Doemen, & Co was forced to decrease its number of employees, mainly through natural outflow, and by the end of 2013 the number of employees was 17. When the contract of an employee is terminated, a notice period of two months must be taken into account. In January and February 2013 no employees were notified to leave the company. 1. Are the labor costs concerning the month of March 2013 fixed or variable? 2. Are the labor costs concerning the period between January 2009 and March 2013 fixed or variable? Required
2-27 Variable and fixed costs. Accounting firm Weetman, Doemen, & Co conducts a variety of activities for small and medium (SM) firms. The number of employees on January 1, 2009, was 25. Due to frequent mergers and acquisitions, a lot of SM firms are taken over. The consequence of this is that the accountant of the larger firm also provides services to the merged SM firm. As Weetman, Doemen, & Co's clients consist mainly of SM firms, business has decreased. The acquisition of new clients and/or increasing business with existing clients hasn't had any results. Weetman, Doemen, & Co was forced to decrease its number of employees, mainly through natural outflow, and by the end of 2013 the number of employees was 17. When the contract of an employee is terminated, a notice period of two months must be taken into account. In January and February 2013 no employees were notified to leave the company. 1. Are the labor costs concerning the month of March 2013 fixed or variable? 2. Are the labor costs concerning the period between January 2009 and March 2013 fixed or variable? Required
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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