*must fill every line! Forrester and Cohen is a small accounting firm, managed b
ID: 358286 • Letter: #
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*must fill every line!
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 3 CPAs together bill 640 hours per month. When Cohen or another accountant bills more than 160 hours per month, he or she gets an additional "overtime" pay of $61.30 for each of the extra hours: this is above and beyond the $4,900 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: Estimate of Billable Hours 600 Month an 1,030 1,210 Mar Apr June 570 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 $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 3 CPAs, and any new CPAs he may hire in your total. Do NOT include Forrester. Estimate of Hours 600 500 1,030 1,210 650 570 Reg. time billable hours Overtime" hours Forrester hours Month Billable CPAs Reg. time cost Overtime" cost Forrester cost Jan Feb Mar Apr June b) Compute the cost of Cohen's plan of using overtime and Forrester The cost of Cohen's plan is S c) Should the firm remain as is, with a total of 4 CPAs? (enter your response as a whole number) O A. The firm should remain as it is O B. The firm should not remain as it is ° C. One would have to carefully examine the other 6 months to see if hiring is meritedExplanation / Answer
b, Cost of Cohen's plan using overtime and Forrester = 1,93,497.00 $ ( Monthly salary of 4 CPAs(1,17,600$) + Overtime clocked by 4 CPAs(42,297$ + Forrester's Clocking(33,600$) for all 6 months (Jan to June)
c.Should the firm remain as it is?
Yes, The firm should remain as it is based on the trend in workload being observed. The wokrload during high peak tax season is extremely tight with the current nuber of CPAs and Forrester;s help added.
With the best interest of the CPAs in mind the firm could give a thought to add additional contract based 1 CPA to split the burden of work during high peak months (March and April) as there is no need for an additional full time CPA as observed form the normalised workload for the existing CPAs provided Forresters's availability to help.
Thanks & Cheers!
Demand for the firm in next 6 months Aggregate plan for the 6 - month period Month Estimate of Billable hours CPAs Required from Each CPA Reg Time billable hours per CPA Reg time cost per CPA Reg time cost for all involved CPAs Overtime Hours per CPA Overtime hours for all involved CPAs Overtime Cost per CPA Overtime Cost for all involved CPAs Forrester Hours Forrester Cost Jan 600 4 150 150 4900 19600 None None None None None None Feb 500 4 125 125 4900 19600 None None None None None None Mar 1030 4 257.5 245 4900 19600 85 340 5210.5 20842 50 6000 Apr 1210 4 302.5 245 4900 19600 85 340 5210.5 20842 230 27600 May 650 4 162.5 162.5 4900 19600 2.5 10 153.25 613 None None Jun 570 4 142.5 142.5 4900 19600 None None None None None NoneRelated Questions
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