Cloward and Hawkins, CPAs, took in $350,000 of gross revenues this year. Besides themselves, they have two professional staff (one manager and one senior accountant) and a full-time secretary. Fixed operating expenses for the office were $50,000 last year. This year, the volume of activity is up 5%, and fixed operating expenses are still $50,000. Total variable operating costs, except for bonuses, average $5 per billable hour. The billable time for all professionals is as follows:

Partners: ......3,000 hours at $75/hour

Manager: .....1,800 hours at $40/hour

Senior accountant: ..2,120 hours at $25/hour

Salaries for the professional staff are $40,000 and $28,000, respectively; the secretary is paid $18,000. The partners each draw salaries of $60,000; plus they share a 5% bonus based on gross revenues. The manager is given a 2% bonus, also based on gross revenues.

Required:

1. Plot the data on a graph clearly showing (a) fixed costs, (b) variable costs, (c) total costs, and (d) total revenues.

2. How much profit did the CPA firm make this year (after partners’ salaries)?