S3-4 Compute a professional billing rate (Learning Objective 7)

Amy Jentes is a new staff accountant at Johnstone & Associates. She is paid a salary of

$60,000 per year and is expected to work 2,000 hours per year on client jobs. The firm’s indirect cost allocation rate is $25 per hour. The firm would like to achieve a profit equal to 30% of cost.

1. Convert Amy’s salary to an hourly wage rate for billing purposes.

2. Calculate the professional billing rate Johnstone & Associates would use for billing out Amy’s services.