Hourly market rate for staff (the price the company would have to pay from an outside contractor for staff services) $100.00 Average hourly cost rate for staff (the average price the company pays to its staff) $60.00 Number of paychecks issued by Audit Division 110 Number of paychecks issued by Tax Division 340 Total expense for Payroll Office $29,250 Amount of assets invested in Audit Division by BOR CPAs, Inc. $10,000,000 Amount of assets invested in Tax Division by BOR CPAs, Inc. $4,000,000
Hourly market rate for staff (the price the company would have to pay from an outside contractor for staff services) $100.00 Average hourly cost rate for staff (the average price the company pays to its staff) $60.00 Number of paychecks issued by Audit Division 110 Number of paychecks issued by Tax Division 340 Total expense for Payroll Office $29,250 Amount of assets invested in Audit Division by BOR CPAs, Inc. $10,000,000 Amount of assets invested in Tax Division by BOR CPAs, Inc. $4,000,000
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter14: Decentralized Operations
Section: Chapter Questions
Problem 14.5.1P
Related questions
Question
Mr. Bailey has prepared the following divisional income statement for you to review, assuming no transfer of excess capacity hours occurs. He has also included the total amounts for BOR CPAs, Inc. in the rightmost column.
Complete the following Income Statements with your data from the Payroll panel. Enter all amounts as positive numbers.
BOR CPAs, Inc.
|
Income Statements
|
For the Year Ended December 31, 20Y1
|
1
|
|
Audit Division
|
Tax Division
|
Total Company
|
2
|
Fees earned:
|
|
|
|
3
|
Audit fees (12 engagements)
|
$900,000.00
|
|
$900,000.00
|
4
|
Tax fees (45 engagements)
|
|
$708,750.00
|
708,750.00
|
5
|
Transfer-pricing fees
|
|
|
0.00
|
6
|
Expenses:
|
|
|
|
7
|
Variable:
|
|
|
|
8
|
Audit hours provided by Audit Division
|
216,000.00
|
|
216,000.00
|
9
|
Tax hours provided by Tax Division
|
|
283,500.00
|
283,500.00
|
10
|
Excess capacity hours paid to salaried staff
|
|
48,000.00
|
48,000.00
|
11
|
Audit hours provided by Tax Division
|
|
0.00
|
0.00
|
12
|
Fixed expenses
|
50,000.00
|
65,500.00
|
115,500.00
|
13
|
Income from operations before service department charges
|
$634,000.00
|
$311,750.00
|
$945,750.00
|
14
|
Service department charges for payroll
|
|
|
|
15
|
Income from operations
|
|
|
|
Hourly market rate for staff (the price the company would have to pay from an outside contractor for staff services) | $100.00 |
Average hourly cost rate for staff (the average price the company pays to its staff) | $60.00 |
Number of paychecks issued by Audit Division | 110 |
Number of paychecks issued by Tax Division | 340 |
Total expense for Payroll Office | $29,250 |
Amount of assets invested in Audit Division by BOR CPAs, Inc. | $10,000,000 |
Amount of assets invested in Tax Division by BOR CPAs, Inc. | $4,000,000 |
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