Bilkins Financial Advisors provides accounting and finance assistance to customers in the retail business. Bilkins has 4 professionals on staff, plus an office with 6 clerical staff. Total compensation, including benefits, for the professional staff runs about $754,000 per year, and they normally have about 8,000 billable hours per year. Professional staff keeps detailed time sheets organized by client number. Office and administrative costs total $576,000 a year. Bilkins allocates professional time and office and administrative costs to clients monthly, using allocation rates based on billable hours. During July, Bilkins' professionals spent 36 hours on their client, Soupy Sales. Bilkins adds a 25% markup on their costs to calculate the amount billed to the customer. How much should the company charge Soupy Sales for the month of July? (Round your intermediate calculations to two decimal places)

Question

Quizplus · Accepted Answer

To calculate the charge for Soupy Sales, first determine the cost per billable hour for professional staff: $754,000 / 8,000 hours = $94.25/hour. Then, calculate the office and administrative cost per billable hour: $576,000 / 8,000 hours = $72/hour. Add these to get the total cost per hour: $94.25 + $72 = $166.25/hour. For 36 hours, the cost is 36 * $166.25 = $5,985. Add a 25% markup: $5,985 * 1.25 = $7,481.25.

Bilkins Financial Advisors Provides Accounting and Finance Assistance to Customers