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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Professional fees earned 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, 20Y7:

Billable Hours
Audit Department:  
Staff 22,400
Partners     7,900
Tax Department:  
Staff 13,200
Partners 5,500
Small Business Accounting Department:  
Staff 3,000
Partners 600

  The average billing rate for staff is $150 per hour, and the average billing rate for partners is $320 per hour. Prepare a professional fees earned budget for Rollins and Cohen, CPAs, for the year ending December 31, 20Y7, using the following column headings and showing the estimated professional fees by type of service rendered:

Billable Hours Hourly Rate   Total Revenue

To determine

Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities.

To Prepare: The professional fees earned budget of Incorporation R.

Explanation

The following table shows the professional fees earned budget.

Incorporation R
Professional Fees Earned Budget
For the Year Ending December 31, 20Y7
Details Billable Hours Hourly Rate ($) Total Revenue ($)
(A) (B) (A) × (B)
Audit Department
  Staff 22,400 150 3,360,000
  Partners 7,900 320 2,528,000
Total 30,300 5,888,000

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