She can allocate her time so that she works only on one type of tax return or on any combination of the three types. a. How should White allocate her time in the coming year to maximize her income? Hours Worked Individual: Answer Estate: Answer Corporate: Answer b. Based on the optimal allocation, what is White’s projected pre-tax income for the coming year? $Answer
Allocation of scarce resources
Since LaNora White graduated with an accounting degree, she has obtained significant experience in a variety of job settings. Her skills include auditing, income and estate
| Individual | Estate | Corporate | |
|---|---|---|---|
| Revenue | $350 | $1,200 | $750 |
| Variable cost | $50 | $200 | $150 |
| Hours per return of White’s time | 2 | 8 | 5 |
Fixed costs of operating the office are $80,000 per year. White has such significant demand for her work that she must ration her time. She desires to work no more than 2,000 hours in the coming year. She can allocate her time so that she works only on one type of tax return or on any combination of the three types.
a. How should White allocate her time in the coming year to maximize her income?
| Hours Worked | |
|---|---|
| Individual: | Answer
|
| Estate: | Answer
|
| Corporate: | Answer
|
b. Based on the optimal allocation, what is White’s projected pre-tax income for the coming year? $Answer
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