Refer to the AccuTax Inc exhibit One of the partners is planning to retire at the end of the year. May Higgins, the sole remaining partner, plans to add a manager at an annual salary of $91,800. She expects the manager to work, on average, 45 hours a week for 45 weeks per year. She plans to change the required staff time for each hour spent to complete a tax return to the following: Complex Individual Simple Individual Business Return Return Return 0.4 hour 0.07 hour Partner 0.13 hour Manager .1 hour onsultant 0.5 hour 0.2 hour Consultant 0.40 hour 0.8 hour The manager is salaried and earns no overtime pay. Senior consultants are salaried but receive time and a half for any overtime worked. The firm plans to keep all the senior consultants and adjust the number of consultants as needed including employing part- time consultants, who also are paid on an hourly basis. Higgins has also decided to have five supporting staff at $49,000 each. All other operating data remain unchanged. The manager willl share 14% of any profit over $490,000 before bonus. Required: 1. What is the budgeted total cost for overtime hours worked by senior consultants? 2. How many full-time consultants should be budgeted? 3. Determine the manager's total compensation and total pretax operating income for the firm, assuming that the revenues from preparing tax returns remain unchanged. Complete this question by entering your answers in the tabs below. Required 2 Required Required 3 What is the budqeted total cost for overtime hours worked by senior consultants? Budgeted total cost for overtime Required 1 Required 2 As an example. AccuTax Inc. provides tax services to small firms and individuals. It expects to have the following revenues from preparing tax returns for the year ended December 31, 2019: $1,000,000 Tax returns for business firms In urns: Simple returns Complex returns $1,640,000 1,200,000 2,840,000 Total revenues $3.840,000 The firm has 2 partners, 8 senior consultants, and 20 consultants. On average. partner week and is paid $250,000 a year. Both senior consultants and consultants are expected to work 40 hours a week and are paid, respectively. $90,000 and $60.000 a year. The annual compensation for supporting staff is $40,000 per full-time equivalent. The number of supporting staff varies with the size of the firm. In general, one supporting staff senior consultants, and one for every 10 consultants. After allowing for vacation, sickness, and continuing education days, the weeks per year available to work with clients are 40 weeks for each partner. 45 weeks for each senior consultant, and 48 weeks for each consultant. All partners and senior consultants are works 50 hours person is needed for every 2 partners, one for every full-time professional staff members. The firm estimates the following required proportions three c imes f eacl complete each spent cations of tax returns: Business Return Simple Individual Complex Individual Parther 10% consultant Consultant 90% 50% General and a a e aled as $150.00 1o0 livi tota ual returns with complicated tax matters, and $50 per hour for simple individual tax returns. The budgeted revenues and the total hours for each of the returns for the coming year are as follows: Budgeted Revenue Hourly Charge Rate equired Hours $250 $1,000,000 4,000 nessetus Simple returns Complex returns 1,640,000 1,200,000 50 32.800 - 100 12,000 Total $3,840,000 48,800 The following table shows the professional staff requirements for the budgeted revenue: Total Hours Consultant Partner Senlor Consultant Business returns ,000 1,600 2.400 1,200 Complex individual returns 12,000 4.800 6,000 29,520 Simple individual returns 32,800 3,280 48,800 2,80 35. 10,480 Total hourS ek (given) Ho Equivalent number of work weeks 56 262 888 Weeks per year/professional 40 45 41 ofessional staff Numbe members needed 1.4 5.8 18.5 The budget shows that AccuTax has sufficient professional staff to support the expected same staff level, its budected operating income will be $808.000. as shown in Exhibit 10.18. EXHIBIT 10. 18 ACCUTAX INC. ing Income with No Change in Staffing uages ed Dece For th 2019 Revenue $3,840,000 Pavroll expenses: Partners 2x $250,000- 8 x $ 90.000 $500,000 Senior consultants 720,000 1 5 40.000= $150,000+ (10 % x $ 2.620,000) 200,000 Supporting staff 2,620,000 General and administrative 412.000 expenses $ 808,000 Operating income 5(2/2+/4 ) 20/10) 1+2+2