Current Attempt in Progress

Jones & Elliott LLC $($J&E$)$ is budgeting for next year. Much of the work that J&E does relates to repeat business $($quarterly and annual

tax filings and annual audits$),$ but the partners also work hard to gain new business. The firm employs $40$ professional accountants$-$all

salaried$-$and four administrative staff members$-$all hourly. The following chart shows the number of accountants by role, along with

targeted billable hours and billable rates for each level. Target Billable Hours per Person are annual amounts, as the TFC are given

annually.

The administrative staff costs the firm, on average, $$20$ per billable hour. Additionally, miscellaneous supplies usually run $$5$ per

billable hour.

$($b$)$

Assume J&E$\text{'}$s fixed costs are budgeted at $$2\mathrm{.}8$ million for next year. How much will the firm generate in operating income if all

professionals h$$t their target billable hours?

Operating income