Pinnacle Consulting Employs Two CPAs,each Having a Different Area of Specialization.Judy

question 99

Essay

Pinnacle Consulting employs two CPAs,each having a different area of specialization.Judy specializes in tax consulting and Steve specializes in management consulting.Pinnacle expects to incur total overhead costs of $519,750 during the year and applies overhead based on annual salary costs.Judy is a senior partner,her annual salary is $225,000,and she is expected to bill 2,000 hours during the year.Steve is a senior associate,his annual salary is $121,500,and he is expected to bill 1,800 hours during the year.
a.Calculate the predetermined overhead rate.
b.Assuming that the hourly billing rate should be set to cover the total cost of services plus a 20% markup,compute the hourly billing rates for Judy and Steve.

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Definitions:

Concordance Rates

The probability that two individuals with shared genes will develop the same traits or disorders, often used in studies of twins to explore the nature versus nurture debate.

Identical Twins

Twins who originate from a single fertilized egg that splits into two, sharing 100% of their DNA and often having very similar physical traits and sometimes behaviors.

Fraternal Twins

Siblings born at the same time who have developed from two separate eggs fertilized by two different sperm, genetically unique from each other.

Amygdala

A region of the brain within the temporal lobe, involved in emotion regulation, especially fear and pleasure.