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Terrell and Associates,CPA's Provides Two Types of Services: Audit and Tax.All

question 90

Essay

Terrell and Associates,CPA's provides two types of services: audit and tax.All company personnel can perform either service.In efforts to market its services,the company relies on radio and billboards for advertising.Information on the company's projected operations for the coming year follows:

                                                                           Aucht \text {\underline{ Aucht} }            Taxes \text {\underline{ Taxes} }
 Revenue per billable hour $35$30 Variable cost of professional labor 2520 Material cost per billable hour 23 Allocated fixed costs per year 100,000200,000 Projected billable hours 14,00010,000\begin{array}{lll}\text { Revenue per billable hour } & \$ 35 & \$ 30 \\\text { Variable cost of professional labor } & 25 & 20 \\\text { Material cost per billable hour } & 2 & 3 \\\text { Allocated fixed costs per year } & 100,000 & 200,000 \\\text { Projected billable hours } & 14,000 & 10,000\end{array}
a. What is the coimpany s projected profit of (loss)?
b. If $1 \$ 1 spent on advertising could increase either aucht services billable time by 1 hour or tax services billable time by 1 hour, o which service should the acvertising dollar be spent?

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Definitions:

Problem Recognition

Problem recognition is the initial step in the consumer decision-making process, where the consumer identifies a need or a problem that requires a solution.

Consumer Decision Making

The process by which consumers identify their needs, gather information, evaluate options, and make purchasing decisions.

Participatory Commerce

An ecommerce model where consumers actively participate in the marketing, selling, and often the development of products.

Social Commerce Strategy

A plan that integrates social media interaction to influence consumers' buying decisions and improve direct selling capabilities.

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