Cloward and Hawkins, CPAs, took in $\$ 350,000$ of gross revenues this year. Besides themselves, they have two professional staff (one manager and one senior) and a full-time secretary. Fixed operating expenses for the office were $\$ 50,000$ last year. This year the volume of activity is up 5 percent, and fixed costs are still $\$ 50,000$. Total variable operating costs, except for bonuses, average $\$ 5$ per billable hour. The billable time for all professionals is as follows:

Partners: $\quad 3,000$ hours at $\$ 75 /$ hour Manager: $\quad 1,800$ hours at $\$ 40 /$ hour Senior:

2,120 hours at $\$ 25 /$ hour Salaries for the professional staff are $\$ 40,000$ and $\$ 28,000$, respectively; the secretary is paid $\$ 18,000$. The partners each draw salaries of $\$ 60,000$; plus they share a 5 percent bonus based on gross revenues. The manager is given a 2 percent bonus, also based on gross revenues.

Required:

Scattergraph Methods of Analysis 1. Plot the data on a graph clearly showing

(a) fixed costs,

(b) variable costs,

(c) total costs, and

(d) total revenues.

2. How much profit did the CPA firm make this year (after partners' salaries)?