Bilkins Financial Advisors provides accounting and finance assistance to customers in the retail business. They have 4 professionals on staff, plus an office with 6 clerical staff. Total compensation, including benefits, for the professional staff runs about $576 000 per year, and they normally have about 8 000 available hours per year. Professional staff keep detailed time sheets distributed by client number. Office and administrative costs total $754 000 a year. Bilkins allocates professional time and administrative costs to clients monthly, using allocation rates based on available hours. During July, Bilkins' professionals spent 36 hours on their client, Soupy Sales. Bilkins adds a 25% markup on their costs to calculate amount billed to the customer. How much did Bilkins bill their customer Soupy Sales for the month of July?

Question

Quizplus · Accepted Answer

The professional hourly rate is $576,000 / 8,000 hours = $72 per hour. The administrative cost per hour is $754,000 / 8,000 hours = $94.25 per hour. Total cost per hour is $72 + $94.25 = $166.25. For 36 hours, the cost is 36 * $166.25 = $5,985. With a 25% markup, the billed amount is $5,985 * 1.25 = $7,481.25.

Bilkins Financial Advisors Provides Accounting and Finance Assistance to Customers