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Richardson Environmental Services Ltd . provides reclamation advice to clients, related to either well sites or pump stations. The company s budgeted income statement for
Richardson Environmental Services Ltd provides reclamation advice to clients, related to either well sites or pump stations. The companys budgeted income statement for the year ended December is shown below. Richardson Environmental Services Ltd Budgeted Income Statement For the Year Ended December Total Professional fees a $ Fixed expenses Salary Richardson Salary Assistants Supplies Occupancy Communications Client relations Inc. before taxes b Inc. tax exp. Net income $ The firms staff consists of one employeeowner Richardson and two assistants. Annual budgeted hours for each employee is The firm expects to complete four well site files and pump station files during fiscal At present, fees are based on time spent on each file by Richardson. Her hourly chargeout rate is $ Average estimated hours to complete a well site file is hours for Richardson and hours for an assistant. Average estimated hours to complete a pump station file is hours by Richardson and hours by an assistant. The remaining hours will be used for other necessary but unbillable activities. Relevant allocation information is as follows: Type of fixed expense Activity Allocation basis Richardson Assistants Total Supplies Supplies used Occupancy Space occupied m Communications # incoming calls Client relations # clients entertained Required: Using timedriven activity based costing, calculate the time equations for Richardson and the assistants that will produce equal pretax profit percentages for each of the two types of reclamation advising service.
Richardson Environmental Services Ltd provides reclamation advice to clients, related to either well sites or pump stations. The companys budgeted income statement for the year ended December is shown below.
Richardson Environmental Services Ltd
Budgeted Income Statement
For the Year Ended December
Total
Professional fees a $
Fixed expenses
Salary Richardson
Salary Assistants
Supplies
Occupancy
Communications
Client relations
Inc. before taxes b
Inc. tax exp.
Net income $
The firms staff consists of one employeeowner Richardson and two assistants. Annual budgeted hours for each employee is The firm expects to complete four well site files and pump station files during fiscal
At present, fees are based on time spent on each file by Richardson. Her hourly chargeout rate is $ Average estimated hours to complete a well site file is hours for Richardson and hours for an assistant. Average estimated hours to complete a pump station file is hours by Richardson and hours by an assistant. The remaining hours will be used for other necessary but unbillable activities.
Relevant allocation information is as follows:
Type of fixed expense Activity Allocation basis
Richardson Assistants Total
Supplies Supplies used
Occupancy Space occupied m
Communications # incoming calls
Client relations # clients entertained
Required: Using timedriven activity based costing, calculate the time equations for Richardson and the assistants that will produce equal pretax profit percentages for each of the two types of reclamation advising service.
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