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Mr. Johnson's small consulting firm specializes in providing internal control advice to his clients. All of his staff are certified internal auditors (CIAS) and

 

Mr. Johnson's small consulting firm specializes in providing internal control advice to his clients. All of his staff are certified internal auditors (CIAS) and want to gain expertise in a variety of industries. Jonas, his most senior consultant, always brings a less-seasoned associate with him for efficiency, training, and general camaraderie. Jonas first assesses a situation in about 8 hours and then will brainstorm ideas the client could use to address its internal control risks. The less-seasoned associate follows Jonas, listens to the half- day assessment ritual, and then helps to brainstorm improvements for the client. Jonas's labor rate is billed at $120/hour, while the associate's billing rate is half that amount. (a) Mr. Johnson believes Jonas operates on a 70% learning curve for the assessment" portion of his work, while his associate operates on a 75% learning curve. Create a chart outlining the number of hours each of these individuals is likely to spend on the next assessment of a client's internal controls. How much time will Mr. Johnson expect each of them to spend on their fourth such assessment of a client's internal controls? (Round answers to 2 decimal places, e.g. 15.25.) (b) Calculate the total billing amount for Jonas and his associate for their (1) first client assessment session and (2) second client assessment session. State whether they are the same or different. Total billing amount for the first assessment $ Total billing amount for the second assessment $ The billing amount for the second assessment would be higher than lower than same as the billing amount was for the first assessment.

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