Walker & Elliott LLC (WSE) is budgeting for next year. Much of the work that W&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 (b) 5 7 8 20 Target Billable Hours per Person 1,100 1,100 1,900 1.900 Billable Rate/Hour $160 120 95 70 The administrative staff costs the firm, on average, $30 per billable hour. Additionally, miscellaneous supplies usually run $5 per billable hour. Assume W&E's fixed costs are budgeted at $2.9 million for next year. How much will the firm generate in operating income if all professionals hit their target billable hours?

Walker & Elliott LLC (WSE) is budgeting for next year. Much of the work that W&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 (b) 5 7 8 20 Target Billable Hours per Person 1,100 1,100 1,900 1.900 Billable Rate/Hour $160 120 95 70 The administrative staff costs the firm, on average, $30 per billable hour. Additionally, miscellaneous supplies usually run $5 per billable hour. Assume W&E's fixed costs are budgeted at $2.9 million for next year. How much will the firm generate in operating income if all professionals hit their target billable hours?

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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