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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Domestic

Transcribed Image Text:Mr. Smith's small consulting firm specializes in providing internal control advice to his clients. All of his staff are certified
internal auditors (CIAS) and want to gain expertise in a variety of industries. Jonas, his most senior consultant, always brings a
less-seasoned associate with him for efficiency, training, and general camaraderie. Jonas first assesses a situation in about 4
hours and then will brainstorm ideas the client could use to address its internal control risks. The less-seasoned associate
follows Jonas, listens to the half-day assessment ritual, and then helps to brainstorm improvements for the client. Jonas's
labor rate is billed at $100/hour, while the associate's billing rate is half that amount.
(a)
Mr. Smith believes Jonas operates on a 70% learning curve for the "assessment" portion of his work, while his associate
operates on a 75% learning curve. Create a chart outlining the number of hours each of these individuals is likely to spend
on the next assessment of a client's internal controls. How much time will Mr. Smith expect each of them to spend on
their fourth such assessment of a client's internal controls? (Round answers to 2 decimal places, e.g. 15.25.)
Time spent on the fourth assessment
Jonas
hours
Jonas' associate
hours
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