Counters and Green, CPAs, LLP had revenues last month of $46,000 with the only variable costs consisting of 100 hours of staff labor at $130 per hour and 50 hours of partner-level labor at $200 per hour. Fixed costs are $120,000 for the year. The firm has a 30% tax rate. Based on this information, the firm's net income last month was

Question

Quizplus · Accepted Answer

The company had labor costs of $23,000 last month: (100 hours of staff labor × $130 per hour) + (50 hours of partner-level labor × $200 per hour)= $13,000 + $10,000 = $23,000. Total variable costs thus amounted to $23,000. Service revenues of $46,000 F1F1F1S1?F1F1F10 variable costs of $23,000 = a contributionmargin of $23,000. Contribution margin of $23,000 F1F1F1S1?F1F1F10 $10,000 of fixed costs per month ($120,000 per year ÷ 12 months) = operating profit of $13,000 lastmonth. At a tax rate of 30%, this would result in taxes of 0.3 × $13,000 = $3,900, leaving a total net income after taxes of $9,100.

Counters and Green, CPAs, LLP Had Revenues Last Month of $46,000