Mr. Bailey has prepared the following divisional income statement for you to review, assuming no transfer of excess capacity hours occurs. He has also included the total amounts for BOR CPAs, Inc. in the rightmost column.Complete the following Income Statements with your data from the Payroll panel. Enter all amounts as positive numbers. BOR CPAs, Inc.Income StatementsFor the Year Ended December 31, 20Y11 Audit DivisionTax DivisionTotal Company2Fees earned: 3Audit fees (12 engagements)$900,000.00 $900,000.004Tax fees (45 engagements) $708,750.00708,750.005Transfer-pricing fees 0.006Expenses: 7Variable: 8Audit hours provided by Audit Division216,000.00 216,000.009Tax hours provided by Tax Division 283,500.00283,500.0010Excess capacity hours paid to salaried staff 48,000.0048,000.0011Audit hours provided by Tax Division 0.000.0012Fixed expenses50,000.0065,500.00115,500.0013Income from operations before service department charges$634,000.00$311,750.00$945,750.0014Service department charges for payroll 15Income from operations Hourly market rate for staff (the price the company would have to pay from an outside contractor for staff services)$100.00Average hourly cost rate for staff (the average price the company pays to its staff)$60.00Number of paychecks issued by Audit Division110Number of paychecks issued by Tax Division340Total expense for Payroll Office$29,250Amount of assets invested in Audit Division by BOR CPAs, Inc.$10,000,000Amount of assets invested in Tax Division by BOR CPAs, Inc.$4,000,000

Audit division refers to advisory and independent body that tries to improve the operations of…

Answered: Hourly market rate for staff (the price…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Mr. Bailey has prepared the following divisional income statement for you to review, assuming no transfer of excess capacity hours occurs. He has also included the total amounts for BOR CPAs, Inc. in the rightmost column.

Complete the following Income Statements with your data from the Payroll panel. Enter all amounts as positive numbers.

BOR CPAs, Inc.

Income Statements

For the Year Ended December 31, 20Y1

1		Audit Division	Tax Division	Total Company
2	Fees earned:
3	Audit fees (12 engagements)	$900,000.00		$900,000.00
4	Tax fees (45 engagements)		$708,750.00	708,750.00
5	Transfer-pricing fees			0.00
6	Expenses:
7	Variable:
8	Audit hours provided by Audit Division	216,000.00		216,000.00
9	Tax hours provided by Tax Division		283,500.00	283,500.00
10	Excess capacity hours paid to salaried staff		48,000.00	48,000.00
11	Audit hours provided by Tax Division		0.00	0.00
12	Fixed expenses	50,000.00	65,500.00	115,500.00
13	Income from operations before service department charges	$634,000.00	$311,750.00	$945,750.00
14	Service department charges for payroll
15	Income from operations

Hourly market rate for staff (the price the company would have to pay from an outside contractor for staff services)	$100.00
Average hourly cost rate for staff (the average price the company pays to its staff)	$60.00
Number of paychecks issued by Audit Division	110
Number of paychecks issued by Tax Division	340
Total expense for Payroll Office	$29,250
Amount of assets invested in Audit Division by BOR CPAs, Inc.	$10,000,000
Amount of assets invested in Tax Division by BOR CPAs, Inc.	$4,000,000

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