Smith & Elliott LLC (S&E) is budgeting for next year. Much of the work that S&E...
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Smith & Elliott LLC (S&E) is budgeting for next year. Much of the work that S&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. Partner Manager Senior Staff Number of Accountants 5 7 8 20 Target Billable Hours per Person 1.200 1,200 1,800 1,800 Billable Rate/Hour $140 125 90 70 The administrative staff costs the firm, on average, $20 per billable hour. Additionally, miscellaneous supplies usually run $5 per billable hour. (b) Assume S&E's fixed costs are budgeted at $2.5 million for next year. How much will the firm generate in operating income if all professionals hit their target billable hours? Operating income dndod Smith & Elliott LLC (S&E) is budgeting for next year. Much of the work that S&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. Partner Manager Senior Staff Number of Accountants 5 7 8 20 Target Billable Hours per Person 1.200 1,200 1,800 1,800 Billable Rate/Hour $140 125 90 70 The administrative staff costs the firm, on average, $20 per billable hour. Additionally, miscellaneous supplies usually run $5 per billable hour. (b) Assume S&E's fixed costs are budgeted at $2.5 million for next year. How much will the firm generate in operating income if all professionals hit their target billable hours? Operating income dndod
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