Overhead (computer costs, rent, utilities, paper, copying, etc.) is determined at the start of the year...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Overhead (computer costs, rent, utilities, paper, copying, etc.) is determined at the start of the year by dividing esti- mated annual overhead costs ($2,400,000) by total esti- mated nonpartner hours (80,000 hours). Approximately 20 percent of the total amount is variable costs. All Primus employees receive a fixed wage (i.e., there is no compen- sation for overtime).Annual compensation in the previous year amounted to the following: Primus is a firm of consultants that focuses on process reengineering and quality improvement initiatives. Northwood Industries has asked Primus to conduct a study aimed at improving on-time delivery. Normal practice for Primus is to bill for consultant time at standard rates plus actual travel costs and estimated overhead. However, Northwood has offered a flat $75,000 for the job.Currently, Primus has excess capacity so it can take on the Northwood job without turning down other business and without hir- ing additional staff. If normal practices were followed, the bill would be: Per Hour Partner $250 Senior consultant Staff consultant $150 $ 80 Required Classification Hours Rate Amount $23,400 20,000 14,400 21,000 8,550 $87,350 What will be the effect on company profit related to accept- ing the Northwood Industries job? What qualitative factors should be considered in the decision whether to accept the job or not? Partner $260 $160 $ 90 90 Senior consultant 125 Staff consultant 160 Travel costs Overhead at $30 per nonpartner hour Total Overhead (computer costs, rent, utilities, paper, copying, etc.) is determined at the start of the year by dividing esti- mated annual overhead costs ($2,400,000) by total esti- mated nonpartner hours (80,000 hours). Approximately 20 percent of the total amount is variable costs. All Primus employees receive a fixed wage (i.e., there is no compen- sation for overtime).Annual compensation in the previous year amounted to the following: Primus is a firm of consultants that focuses on process reengineering and quality improvement initiatives. Northwood Industries has asked Primus to conduct a study aimed at improving on-time delivery. Normal practice for Primus is to bill for consultant time at standard rates plus actual travel costs and estimated overhead. However, Northwood has offered a flat $75,000 for the job.Currently, Primus has excess capacity so it can take on the Northwood job without turning down other business and without hir- ing additional staff. If normal practices were followed, the bill would be: Per Hour Partner $250 Senior consultant Staff consultant $150 $ 80 Required Classification Hours Rate Amount $23,400 20,000 14,400 21,000 8,550 $87,350 What will be the effect on company profit related to accept- ing the Northwood Industries job? What qualitative factors should be considered in the decision whether to accept the job or not? Partner $260 $160 $ 90 90 Senior consultant 125 Staff consultant 160 Travel costs Overhead at $30 per nonpartner hour Total
Expert Answer:
Answer rating: 100% (QA)
1 Incremental Revenue75000 Less incremental cost Partner salaries 90 x 250 2250... View the full answer
Related Book For
Introduction to Governmental and Not for Profit Accounting
ISBN: 978-0132776011
7th edition
Authors: Martin Ives, Terry K. Patton, Suesan R. Patton
Posted Date:
Students also viewed these accounting questions
-
Northwood Industries has asked Primus to conduct a study aimed at improving on-time delivery. Normal practice for Primus is to bill for consultant time at standard rates plus actual travel costs and...
-
At the start of calendar year 2012, Central Citys records showed the following accounts relative to prior year property taxes: Property taxes delinquent............ 52,000 Allowance for uncollectible...
-
At the start of the year Cornish plc entered into a number of financial instruments and is considering how to classify these instruments under IAS 39. The instruments are as follows: (a) Investment...
-
Case 2: Company DEF I have 20 staff, with 2 groups rotating the shift. Group 1: - working 6 days in week 1 and week 3. - Working 5 days in week 2 and week 4 Group 2: - working 6 days in week 2 and...
-
Briefly define the following terms: True data dependency Procedural dependency Resource conflicts Output dependency Ant dependency
-
A coal mine expected to contain 6.5 million tons of coal was purchased at a cost of $30 million. One million tons of coal for steel-making arc produced this year. The gross income for this coal is $...
-
Explain the difference between physical and logical schemas.
-
KC Company began operations when it acquired $30,000 cash from the issue of common stock on January 1, 2011. The cash acquired was immediately used to purchase equipment for $30,000 that had a $5,000...
-
Two lakes are located on the same river, as shown in Figure 11-6. A is upstream of B. Water flows into A at a rate SA; it evaporates from A at a rate EA and from B at a rate EB. A tributary flows...
-
Donna Shader, manager of the Winter Park Hotel, is considering how to restructure the front desk to reach an optimum level of staff efficiency and guest service. At present, the hotel has five clerks...
-
An electron in a television tube has a charge of 1.6 x 10-19 coulombs and travels at 3 x 107 m/s perpendicular to a field of flux density 18.5 T. Determine the force exerted on the electron in the...
-
The five techniques referenced (forming alliances, preparation, positioning the message for the audience, keeping information simple and answering questions with confidence)Discuss why keeping...
-
What were the proposed benefits of the TPP? What were the potential drawbacks of the U.S. entering the TPP? While the U.S. officially withdrew from the TPP and thus the CPTPP, do you think that the...
-
Focus on organizational change in a criminal justice organization. Your task is to identify a reason to necessitate a change in the criminal justice organization of your choice (police, court...
-
How does the criminal justice organization/agency support the general goals of criminal justice?
-
how would you describe the writer's attitude towards wildlife conversation?writer's your thoughts and opinions. This discussion is based on the following paragraph. As you read it, consider the...
-
Harold sells bags of soil to its customers for $ 7 per bag. It costs Harold $ 1 in direct labour to retrieve and bag the soil. The pre - printed bag costs Harold $ 1 from a local plastics supplier....
-
How does the organizational structure of an MNC influence its strategy implementation?
-
The State Turnpike Commission (STC) was established by the state to construct, operate, and maintain the state turnpike system. The STC was created as an instrumentality of the state as a separate...
-
Oliver City reported capital assets of $ 4,300,000 and accumulated depreciation of $ 2,000,000 in the governmental activities column of its government- wide statement of net position for the year...
-
The city council appropriated $ 80,000 to the Parks Department for the purchase of shrubs, trees, small tools, and small items of equipment. The following transactions and events occurred regarding...
-
Describe the process of determining a nominal interest rate.
-
How does risk affect the financial management of sport organizations?
-
Of MLB, the NBA, and the NHL, which league has the most risk, and which has the least? Why?
Study smarter with the SolutionInn App