Professional Labor Cost Budget for a Service Company
Rollins and Cohen, CPAs, offer three types of services to clients: auditing, tax, and small business accounting. Based on experience and projected growth, the following billable hours have been estimated for the year ending December 31, 20Y8:
Billable Hours | |||
Audit Department: | |||
Staff | 36,000 | ||
Partners | 5,400 | ||
Tax Department: | |||
Staff | 26,600 | ||
Partners | 3,300 | ||
Small Business Accounting Department: | |||
Staff | 5,000 | ||
Partners | 700 |
Based on the data provided above and assuming that the average compensation per hour for staff is $65 and for partners is $160, prepare a professional labor cost budget for each department for Rollins and Cohen, CPAs, for the year ending December 31, 20Y8.
Rollins and Cohen, CPAs | ||
Professional Labor Cost Budget | ||
For the Year Ending December 31, 20Y8 | ||
Staff | Partners | |
Audit Department hours | ||
Tax Department hours | ||
Small Business Accounting Department hours | ||
Total hours | ||
Average compensation per hour | x $ | x $ |
Total professional labor cost | $ | $ |
Professional Labor Cost Budget | ||
For the Year Ending December 31, 20Y8 | ||
Staff | Partners | |
Audit Department hours | 36000 | 5400 |
Tax Department hours | 26600 | 3300 |
Small Business Accounting Department hours | 5000 | 700 |
Total hours (a) | 67600 | 9400 |
Average compensation per hour (b) | $65.00 | $160.00 |
Total professional labor cost (aXb) | $4,394,000.00 | $1,504,000.00 |
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