Rollins and Cohen, CPAs, offer three types of services to clients: auditing, tax, and small business accounting. Based on experience and projected growth

Rollins and Cohen, CPAs, offer three types of services to clients: auditing, tax, and small business accounting. Based on experience and projected growth, the following billable hours have been estimated for the year ending December 31, 2014:













Billable Hours
Audit Department:
Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,400
Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,900
Tax Department:
Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,200
Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500
Small Business Accounting Department:
Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600


The average billing rate for staff is $150 per hour, and the average billing rate for partners is $320 per hour. Prepare a professional fees earned budget for Rollins and Cohen, CPAs, for the year ending December 31, 2014, using the following column headings and showing the estimated professional fees by type of service rendered:






Billable Hours Hourly Rate Total Revenue


Answer:





















ROLLINS AND COHEN, CPAs
Professional Fees Earned Budget
For the Year Ending December 31, 2014
Billable
Hours
Hourly
Rate
Total
Revenue
Audit Department:
Staff 22,400 $150 $ 3,360,000
Partners 7,900 320 2,528,000
Total 30,300 $ 5,888,000
Tax Department:
Staff 13,200 $150 $ 1,980,000
Partners 5,500 320 1,760,000
Total 18,700 $ 3,740,000
Small Business Accounting Department:
Staff 3,000 $150 $ 450,000
Partners 600 320 192,000
Total 3,600 $ 642,000
Total professional fees earned $10,270,000

Based on the data in Exercise 22-7 and assuming that the average compensation per hour for staff is $45 and for partners is $140

Based on the data in Exercise 22-7 and assuming that the average compensation per hour for staff is $45 and for partners is $140, prepare a professional labor cost budget for each department for Rollins and Cohen, CPAs, for the year ending December 31, 2014. Use the following column headings:






Staff Partners


Answer:














ROLLINS AND COHEN, CPAs
Professional Labor Cost Budget
For the Year Ending December 31, 2014
Staff Partners
Audit Department hours 22,400 7,900
Tax Department hours 13,200 5,500
Small Business Accounting Department hours 3,000 600
Total hours 38,600 14,000
Average compensation per hour × $45 × $140
Total professional labor cost $1,737,000 $1,960,000