Answered: more than 155 hours per month, he or…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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

CPAs together bill

620

hours per month. When Cohen or another accountant bills more than

155

hours per month, he or she gets an additional "overtime" pay of

$65.80

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

245

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.	600
Feb.	510
Mar.	1,010
Apr.	1,220
May	660
June	580

Cohen has an agreement with Forrester, his former partner, to help out during the busy tax season, up to

245

hours in any given month if needed, for an hourly fee of

$135.

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.

Part 2

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

CPAs, and any new CPAs he may hire in your total. Do NOT include Forrester.

Month	Estimate of Billable Hours	CPAs	Reg. time billable hours	Reg. time cost	"Overtime" hours	"Overtime" cost	Forrester hours	Forrester cost
Jan.	600	enter your response here	enter your response here	$enter your response here	enter your response here	$enter your response here	enter your response here	$enter your response here