Answered: ESTIMATE OF MONTH BILLABLE HOURS…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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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 three CPAs can 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$62.50 for each of the extra hours: this is above
and beyond the $5,000 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
240 hours in any given month. The demand for billable hours for
the firm over the next 6 months is estimated below: Cohen has an agreement with Forrester, his former partner,
to help out during the busy tax season, if needed, for an hourly fee
of $125. 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.
b) Compute the cost of Cohen's plan of using overtime and
Forrester.
c) Should the firm remain as is, with a total of four CPAs?