more than 155 hours per month, he or she gets an additional "overtime" pay of $65.80
more than 155 hours per month, he or she gets an additional "overtime" pay of $65.80
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Forrester and Cohen is a small accounting firm, managed by Joseph Cohen since the retirement in December of his partner Brad Forrester. Cohen and his
3
CPAs together bill
620
hours per month. When Cohen or another accountant bills more than
155
hours per month, he or she gets an additional "overtime" pay of
$65.80
for each of the extra hours: this is above and beyond the
$5,100
salary each draws during the month. (Cohen draws the same base pay as his employees.) Cohen strongly discourages any CPA from working (billing) more than
245
hours in any given month. The demand for billable hours for the firm over the next 6 months is estimated below:
Month
|
Estimate of Billable Hours
|
Jan.
|
600
|
Feb.
|
510
|
Mar.
|
1,010
|
Apr.
|
1,220
|
May
|
660
|
June
|
580
|
Cohen has an agreement with Forrester, his former partner, to help out during the busy tax season, up to
245
hours in any given month if needed, for an hourly fee of
$135.
Cohen will not even consider laying off one of his colleagues in the case of a slow economy. He could, however, hire another CPA at the same salary, as business dictates.Part 2
a) Develop an aggregate plan for the 6-month period (enter your responses as whole numbers). Use regular time, then overtime, then Forrester, and then hire additional CPAs if needed.
Note: For the CPA column, only include Cohen, his
3
CPAs, and any new CPAs he may hire in your total. Do NOT include Forrester.
Month
|
Estimate of Billable Hours
|
CPAs
|
Reg. time billable hours
|
Reg. time cost
|
"Overtime" hours
|
"Overtime" cost
|
Forrester hours
|
Forrester cost
|
Jan.
|
600
|
enter your response here
|
enter your response here
|
$enter your response here
|
enter your response here
|
$enter your response here
|
enter your response here
|
$enter your response here
|
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