Michael McNamara and Gregory Lau met while in university and always knew they wanted to be...

Transcribed Image Text:

Michael McNamara and Gregory Lau met while in university and always knew they wanted to be in business together. Shortly after university Michael went to work for a large mulinational firm while Gregory pursued an MBA. After several years of experience the firm Lau McNamara was established on July 1, 1984 and the firm experienced slow but steady growth over time. It is now 2020 and Lau McNamara has grown to total staff of 55 employees and revenues exceeding $13,000,000 year. They have largely grown in the area of consulting, tax and accounting. About 5 years ago they hired a rising star Rose Femia. She has exceeded all expectations and has been pushing to expand the services provided by the firm to include assurance services. Mr. McNamara with his extensive contacts has been asked to bid on a contract to perform audits for 3 municipalities within the province of Ontario. He has assigned this task to Ms. Femia. At the moment staff are fully scheduled, if Lau McNamara were to be awarded the contract. it must hire one new staff member at an annual remuneration of $67.000 to handle the addrional workload. Ms. Femia is convinced that obtaining the contract will lead to addtional new clients from the respective municipalities Expected new work (excluding the three municipalities) is 900 hours at an average billing rate of $90 per hour Qther information follows about the fem's current annual revenues ond costs ire volume in heurs (norel) Plved costs Variable cost 30,750 $575,00 35/hr Should the firm win the contract, the audits of the three municpalities will require 800 nours of nxpected work Michael McNamara and Gregory Lau met while in university and always knew they wanted to be in business together. Shortly after university Michael went to work for a large mulinational firm while Gregory pursued an MBA. After several years of experience the firm Lau McNamara was established on July 1, 1984 and the firm experienced slow but steady growth over time. It is now 2020 and Lau McNamara has grown to total staff of 55 employees and revenues exceeding $13,000,000 year. They have largely grown in the area of consulting, tax and accounting. About 5 years ago they hired a rising star Rose Femia. She has exceeded all expectations and has been pushing to expand the services provided by the firm to include assurance services. Mr. McNamara with his extensive contacts has been asked to bid on a contract to perform audits for 3 municipalities within the province of Ontario. He has assigned this task to Ms. Femia. At the moment staff are fully scheduled, if Lau McNamara were to be awarded the contract. it must hire one new staff member at an annual remuneration of $67.000 to handle the addrional workload. Ms. Femia is convinced that obtaining the contract will lead to addtional new clients from the respective municipalities Expected new work (excluding the three municipalities) is 900 hours at an average billing rate of $90 per hour Qther information follows about the fem's current annual revenues ond costs ire volume in heurs (norel) Plved costs Variable cost 30,750 $575,00 35/hr Should the firm win the contract, the audits of the three municpalities will require 800 nours of nxpected work

Answer rating: 100% (QA)

Assumed that the Hourly Billing rate will remain at 90 Analy... View the full answer