Question

Forrester and Cohen is a small accounting​ firm, managed by Joseph Cohen since the retirement in December of his partner Brad Forrester. Cohen and his 4 CPAs together bill 800 hours per month. When Cohen or another accountant bills more than 160 hours per​ month, he or she gets an additional​ "overtime" pay of ​$61.00 for each of the extra​ hours: This is above and beyond the $5,100 salary each draws during the month.​ (Cohen draws the same base pay as his​ employees.) Cohen strongly discourages any CPA from working​ (billing) more than 230 hours in any given month. The demand for billable hours for the firm over the next 6 months is estimated​ below:

Month:                   Estimate of Billable Hours

Jan.                                         682

Feb.                                         539

Mar.                                        1133

Apr.                                         1331

May                                         726

June                                        638

Cohen has an agreement with​ Forrester, his former​ partner, to help out during the busy tax​ season, up to 230 hours in any given month if​ needed, for an hourly fee of $120. Cohen will not even consider laying off one of his colleagues in the case of a slow economy. He​ could, however, hire another CPA at the same​ salary, as business dictates.

a) Develop an aggregate plan for the​ 6-month period ​(enter your responses as whole​ numbers). Use regular​ time, then​ overtime, then​ Forrester, and then hire additional CPAs if needed.

​Note: For the CPA​ column, only include​ Cohen, his 4 CPAs, and any new CPAs he may hire in your total. Do NOT include Forrester.

Month	Est. of Billable hours	CPAs	Reg. time billable hours	Reg. time cost	Overtime hours	Overtime cost	Forrester hours	Forrester cost
Jan	682	?	?	?	?	?	?	?
Feb	539	?	?	?	?	?	?	?
Mar	1133	?	?	?	?	?	?	?
Apr	1331	?	?	?	?	?	?	?
May	726	?	?	?	?	?	?	?
Jun	638	?	?	?	?	?	?	?

b) Compute the cost of​ Cohen's plan of using overtime and Forrester.

Total cost= ?

Answer 1

(a)

(b) Total Cost= Regular cost + Over time Cost + Forrestor cost

=153,000+ 41,663 + 21720

$216,383

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