Leopold & Olney LLP has five partners and 12 staff accountants. The partners each work 2,100 hours per year and earn $ 350,000 annually. The staff accountants each work 2,600 hours per year and earn $ 80,000 annually. The firm’s total annual budget for professional support available to partners and staff accountants is $ 312,750. The firm also spends $ 125,100 for administrative support that is used only by the partners.
a. Assume that total support cost is considered a unit-level cost based on number of work hours. What is the support rate per labor hour?
b. If one audit engagement requires 60 partner hours and 220 staff accountant hours, how much professional support cost would be charged to the engagement using the rate determined in (a)?
c. Assume that support costs are considered batch-level costs based on number of work hours. What are the professional and administrative support rates per labor hour? (Round to the nearest cent.)
d. If an audit engagement requires 60 partner hours and 220 staff accountant hours, how much support cost would be charged to the engagement using the rates determined in (c)?