Professionals Pty Ltd is a firm that offers a wide variety of professional services such as marketing,
Question:
Professionals Pty Ltd is a firm that offers a wide variety of professional services such as marketing, employment of professionals for other firms and accounting services. The firm has the following annual overhead costs:
Office rent Secretarial staff wages Cleaning costs Depreciation of office equipment Lease of office furniture Floral arrangements Stationery costs not chargeable to clients Office manager’s salary and on-costs Advertising Sundry overhead cost | $104000 210000 7800 260000 83200 2600 31200 84000 41600 174000 |
The firm has six professionals with total salary plus on-costs of $1248000. The owners of the firm have invested $1797120 in the firm and expect a return on this investment of 25%. Alice is one of the six professionals and her total salary plus on-costs is $104000. It is assumed by the firm that each professional will charge 40 hours per week for 48 weeks of the year. Professionals are expected to work as many hours as it takes each week to enable them to charge out 40 hours so that there is no cost to the firm of non-chargeable hours.
Required
Calculate the hourly charge out rate for Alice’s services by allocating the office overhead costs and return on owners’ investment on the basis of total salary plus on costs for each professional.
Step by Step Answer:
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett