Question

King & Elliott LLC (K&E) is budgeting for next year. Much of the work that K&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. Number of Accountants Target Billable Hours per Person Billable Rate/Hour Partner 5 1,100 $155 Manager 7 1,100 120 Senior 8 1,700 105 Staff 20 1,700 80 The administrative staff costs the firm, on average, $15 per billable hour. Additionally, miscellaneous supplies usually run $5 per billable hour. (b) * Your answer is incorrect. Assume K&E's fixed costs are budgeted at $3.3 million for next year. How much will the firm generate in operating income if all professionals hit their target billable hours? Operating income $ 1,331,000

          King & Elliott LLC (K&E) is budgeting for next year. Much of the work that K&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.
Number of
Accountants
Target Billable
Hours per Person
Billable
Rate/Hour
Partner
5
1,100
$155
Manager
7
1,100
120
Senior
8
1,700
105
Staff
20
1,700
80
The administrative staff costs the firm, on average, $15 per billable hour. Additionally, miscellaneous supplies usually run $5 per
billable hour.
(b)
* Your answer is incorrect.
Assume K&E's fixed costs are budgeted at $3.3 million for next year. How much will the firm generate in operating income if all
professionals hit their target billable hours?
Operating income
$
1,331,000

King Elliott LLC (K E) is budgeting for next year. Much of the work that K 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.
Number of
Accountants
Target Billable
Hours per Person
Billable
Rate/Hour
Partner
5
1,100
155
Manager
7
1,100
120
Senior
8
1,700
105
Staff
20
1,700
80
The administrative staff costs the firm, on average,15 per billable hour. Additionally, miscellaneous supplies usually run 5 per
billable hour.
(b)
* Your answer is incorrect.
Assume K E's fixed costs are budgeted at3.3 million for next year. How much will the firm generate in operating income if all
professionals hit their target billable hours?
Operating income
1,331,000

Added by Benjamin H.

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