Domino Consulting Has Two Departments, Information Technology Consulting and General

question 21

Essay

Domino Consulting has two departments, Information Technology Consulting and General Business Consulting. The firm has Partners, Senior Consultants and Junior Consultants in each department. The firm is preparing its budgets for the upcoming year.
The controller received the following information from the marketing department about anticipated demand for the firm's products in the upcoming year: The controller then worked with the human resources department to determine the following information about staffing and salary rates for each department: The controller has also determined that in order to be profitable, billing rates should be three times the amount paid to employees. The marketing department has determined that billing rates computed on that basis are comparable to what other consulting firms charge.
(a) Prepare a revenue budget for Domino Consulting Company.
(b) Prepare a labor budget for Domino Consulting Company.

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Definitions:

Straight-Line Method

A method of calculating depreciation of an asset, which spreads the cost of the asset evenly over its useful life.

Bond Premium

The amount by which the market price of a bond exceeds its principal amount or face value.

Discount on Bonds Payable

The gap between a bond's face value and its market selling price, occurring when the bond sells below its nominal value.

Straight-Line Amortization

A method of reducing the carrying amount of an intangible asset over its useful life in equal amounts.