Question

Professional Labor Cost Budget for a Service Company

Roberts and Chou, 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, 2016:

		Billable Hours
Audit Department:
	Staff	28,300
	Partners	4,200
Tax Department:
	Staff	20,900
	Partners	2,600
Small Business Accounting Department:
	Staff	3,700
	Partners	500

Based on the data provided above and assuming that the average compensation per hour for staff is $40 and for partners is $135, prepare a professional labor cost budget for each department for Roberts and Chou, CPAs, for the year ending December 31, 2016.

Roberts and Chou, CPAs
Professional Labor Cost Budget
For the Year Ending December 31, 2016
	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	$	$

Answer 1

Answer
Roberts and Chou, CPAs
Professional Fees Earned Budget
For the Year Ending December 31, 2016
	Billable Hours	Hourly Rate	Total Revenue
Audit Department:
Staff	28300	40	$      1,132,000
Partners	4200	135	$         567,000
Total			$      1,699,000
Tax Department:
Staff	20900	40	$         836,000
Partners	2600	135	$         351,000
Total			$      1,187,000
Small Business Accounting Department:
Staff	3700	40	$         148,000
Partners	500	135	$           67,500
Total			$         215,500
Total professional fees earned			$      3,101,500