On behalf of its clients, the firm conducts focus group meetings, telephone and mail opinion surveys, and evaluations of marketing strategies. The firm has three partners and six nonpartner professionals. At the start of the year, the company estimated a total professional compensation (for the three partners and six nonpartner professionals) to be $1,600,000.
Connie Bachmann (partner), 40 hours at a salary averaging $120 per hour $4,800.
Ambrose Bundy (professional staff), 100 hours at a salary of $40 per hour $4,000.
Direct charges for actual travel, mailing, and postage = $3,000.
Total of above $11,800.

a. Calculate the expected full cost of the Surenex engagement, including an allocation of overhead.
b. What is the lowest amount that Connie can bill on this engagement without hurting company profit?
c. In deciding on a price for the engagement, what should Connie consider in addition to the amount calculated in (b)?

  • CreatedSeptember 18, 2013
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