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

question 20

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.
$\begin{array}{lc}\text { Monthly salaries for } 4 \text { juniors @ } @ 3,000 \text { each } & \$ 12,000 \\\text { Monthly auditing department overhead costs } & \$ 83,160 \\\text { Average number of hours worked each month } & 800 \mathrm{hr}\end{array}$
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.

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Definitions:

Control Limits

Statistical boundaries defined in control charts that indicate the acceptable range of variability in a process.

Process Capability Analysis

A statistical technique to determine if a process has the capability to produce products that meet specifications.

Control Charts

Statistical tools used for monitoring and controlling a process by tracking its performance over time.

Special Causes

In the context of quality control, special causes refer to sources of variation that are not inherent to the process but arise due to external factors or irregular occurrences.