Target operating income, value-added costs, service company. Calvert Associates prepares architectural drawings to conform to local structural-safety codes. Its income statement for 2017 is as follows: $701,250 390,000 Revenues Salaries of professional staff (7,500 hours x $52 per hour) Travel 15,000 Administrative and support costs 171,600 576,600 Total costs Operating income $124,650 The percentage of time spent by professional staff on various activities follows: 77% Making calculations and preparing drawings for clients Checking calculations and drawings Correcting errors found in drawings (not billed to clients) Making changes in response to client requests (billed to clients) Correcting own errors regarding building codes (not billed to clients) 3 5 Total 100% Assume administrative and support costs vary with professional-labor costs.

Target operating income, value-added costs, service company. Calvert Associates prepares architectural drawings to conform to local structural-safety codes. Its income statement for 2017 is as follows: $701,250 390,000 Revenues Salaries of professional staff (7,500 hours x $52 per hour) Travel 15,000 Administrative and support costs 171,600 576,600 Total costs Operating income $124,650 The percentage of time spent by professional staff on various activities follows: 77% Making calculations and preparing drawings for clients Checking calculations and drawings Correcting errors found in drawings (not billed to clients) Making changes in response to client requests (billed to clients) Correcting own errors regarding building codes (not billed to clients) 3 5 Total 100% Assume administrative and support costs vary with professional-labor costs.

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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