Dale,Smith,and Associates,a CPA Firm,is Trying to Determine the Hourly Cost

question 16

Essay

Dale,Smith,and Associates,a CPA firm,is trying to determine the hourly cost of its junior accountants in the auditing department.The following data have been gathered.
$\begin{array}{lc}\text { Monthly salaries for } 4 \text { juniors @ } \$ 3,000 \text { each } & \$ 12,000 \\\text { Monthly auditing department overhead costs } & \$ 83,160 \\\text { Average number of hours worked each month } & 800\text { hr}\end{array}$
Assuming 40 percent of the monthly overhead costs for the auditing department are attributable to the junior accountants,compute the hourly cost of their services.

---

Definitions:

Account Receivable

Amounts owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity of a business.

Supplies

Items used in the day-to-day operations of a business, often consumable in nature, such as office supplies, manufacturing materials, or maintenance necessities.

Equipment

Tangible property used in the operations of a business, such as machinery and tools, which are not intended for sale.