Fees earned: Audit fees (12 engagements) Tax fees (45 engagements) Transfer-pricing fees Expenses: BOR CPAS, Inc. Divisional Income Statements For the Year Ended December 31, 2018 Audit Division $900,000 Tax Division Total Company $900,000 $708,750 708,750 0 Variable: Audit hours provided by Audit Division (180,000) (180,000) Tax hours provided by Tax Division Excess capacity hours paid to salaried staff (236,250) (40,000) (236,250) (40,000) Audit hours provided by Tax Division 0 0 Fixed expenses (50,000) (65,500) (115,500) Operating income before support department allocations. $670,000 $367,000 $1,037,000 Support department allocations for payroll Operating income