Jamal, Kareem, Rashid and Associates Are in the Process of Evaluating

question 206

Multiple Choice

Jamal, Kareem, Rashid and Associates are in the process of evaluating its new client services for the business consulting division.
-Estate Planning, a new service, incurred $180,000 in development costs and employee training.
-The direct costs of providing this service, which is all labor, averages $30 per hour.
-Other costs for this service are estimated at $450,000 per year.
-The current program for estate planning is expected to last for two years. At that time, a new law will be in place that will require new operating guidelines for the tax consulting.
-Customer service expenses average $104 per client, with each job lasting an average of 500 hours. The current staff expects to bill 50,000 hours for each of the two years the program is in effect. Billing averages $46 per hour.
What is estimated life-cycle operating income for the first year?

• A) $339,600
• B) $149,200
• C) $159,600
• D) $319,200

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Definitions:

Power of Attorney

A formal document that gives one person (the agent) the power to represent another (the principal) in matters of law or finance.

Seal

A device or substance used to close or secure an object or document, often signifying authenticity, confidentiality, or approval.

Subsequent Agreement

An agreement made after a written agreement that alters or cancels the written agreement.

Verbal Agreement

An oral contract that is formed through spoken communication rather than in writing, though its legal enforceability varies by jurisdiction.