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Chris and Alan CA5 is a wellnestablished accounting rm with two partners and four staff in a small, rural town. The firm performs financial statement

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Chris and Alan CA5 is a wellnestablished accounting rm with two partners and four staff in a small, rural town. The firm performs financial statement reviews and compilations and prepares tax returns for local companies and individuals. One partner is concerned that several Inngrtime individual clients may not he prntable and should be dropped. One of these customers is Mabel Farley. Her datumentation is highly disorganized, and she brings it mm the rm five days before the ling deadline. Her tax return requires about 6 hours of start time and 1 hour of partner time. she has been paying a flat fee of $318 each year. A more recent customer is John Cruwe. His documentation is well organized, and he brings it into the firm three months before the filing deadline. His nancial dealings require a fairly complex tax return. His return requires 1 hour of staff time and 2 huurs of partner time. John pays based on time at a rate of $145 per hour. The firm is opeiating at capacity durina tax season, partners and start work 14, to lBrhuur days in March and April to complete all the returns before the April 30 deadline. Staff members are paid $21 per hour, and partners are paid $100 per hour Fixed overhead costs such as rent are allocated to each Job at a iate or $45 per partner labour hour. Which customer is more protable? Prot $ $ is more protable. At what at tee for Mahel's return would the firm lie indifferent between the two clients, assuming no time constraints for completing the returns? Assuming staff and partner oosts are xed $ Assuming staff and partner costs are variable 39

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