Professional Labor Cost Budget for a Service Company Rollins and Cohen, CPAs, of

Question

Professional Labor Cost 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:

Based on the data provided above and assuming that the average compensation per hour for staff is $60 and for partners is $155, prepare a professional labor cost budget for each department for Rollins and Cohen, CPAs, for the year ending December 31, 20Y7.

Billable Hours Audit Department: Staff 38,500 Partners 5,800 Tax Department: Staff 28,500 Partners 3,600 Small Business Accounting Department: Staff 5,000 Partners 700

Explanation / Answer

the following is the professional labour cost budget:

staff partnets audit department hours 38,500 5,800 tax department hours 28,500 3,600 small business accounting department hours 5,000 700 total hours 72,000 10,100 average compensation per hour $60 $155 total professional labour cost $4,320,000 $1,565,500

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