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King & Elliott LLC (K&E) is budgeting for next year. Much of the work that K&E does relates to repeat business (quarterly and ann tax filings and annual audits), but the partners also work hard to gain new business. The firm employs 40 professional accountants salaried and four administrative staff members-all hourly. The following chart shows the number of accountants by role, along w targeted billable hours and billable rates for each level. Target Billable Hours per Person are annual amounts, as the TFC are given annually Partner Manager Senior Staff Number of Accountants 5 5) 20 Target Billable Hours per Person 1,100 1.100 1,700 1,700 Billable Rate/Hour $155 120 105 80 he administrative staff costs the firm, on average, $15 per billable hour. Additionally, miscellaneous supplies usually run $5 per illable hour.

King & Elliott LLC (K&E) is budgeting for next year. Much of the work that K&E does relates to repeat business (quarterly and ann tax filings and annual audits), but the partners also work hard to gain new business. The firm employs 40 professional accountants salaried and four administrative staff members-all hourly. The following chart shows the number of accountants by role, along w targeted billable hours and billable rates for each level. Target Billable Hours per Person are annual amounts, as the TFC are given annually Partner Manager Senior Staff Number of Accountants 5 5) 20 Target Billable Hours per Person 1,100 1.100 1,700 1,700 Billable Rate/Hour $155 120 105 80 he administrative staff costs the firm, on average, $15 per billable hour. Additionally, miscellaneous supplies usually run $5 per illable hour.

FINANCIAL ACCOUNTING
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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King & Elliott LLC (K&E) is budgeting for next year. Much of the work that K&E does relates to repeat business (quarterly and annual tax filings and annual audits), but the partners also work hard to gain new business. The firm employs 40 professional accountants-all salaried and four administrative staff members-all hourly. The following chart shows the number of accountants by role, along with targeted billable hours and billable rates for each level. Target Billable Hours per Person are annual amounts, as the TFC are given annually Partner Manager Senior Staff Number of Accountants 5 7 8 20 (b) Target Billable Hours per Person 1,100 Operating income $ 1.100 1,700 1,700 eTextbook and Media Billable Rate/Hour The administrative staff costs the firm, on average, $15 per billable hour. Additionally, miscellaneous supplies usually run $5 per billable hour. $155 120 105 80 Assume K&E's fixed costs are budgeted at $3.3 million for next year. How much will the firm generate in operating income if all professionals hit their target billable hours?
Transcribed Image Text:King & Elliott LLC (K&E) is budgeting for next year. Much of the work that K&E does relates to repeat business (quarterly and annual tax filings and annual audits), but the partners also work hard to gain new business. The firm employs 40 professional accountants-all salaried and four administrative staff members-all hourly. The following chart shows the number of accountants by role, along with targeted billable hours and billable rates for each level. Target Billable Hours per Person are annual amounts, as the TFC are given annually Partner Manager Senior Staff Number of Accountants 5 7 8 20 (b) Target Billable Hours per Person 1,100 Operating income $ 1.100 1,700 1,700 eTextbook and Media Billable Rate/Hour The administrative staff costs the firm, on average, $15 per billable hour. Additionally, miscellaneous supplies usually run $5 per billable hour. $155 120 105 80 Assume K&E's fixed costs are budgeted at $3.3 million for next year. How much will the firm generate in operating income if all professionals hit their target billable hours?
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