Question

Professional Fees Earned Budget for a Service Company

Rollins and Cohen, CPAs, offer three types of services to clients: auditing, tax, and small business accounting. Based on experience and projected growth, the following billable hours have been estimated for the year ending December 31, 2016:

Billable Hours
Audit Department:
Staff 22,400
Partners 7,900
Tax Department:
Staff 13,200
Partners 5,500
Small Business Accounting Department:
Staff 3,000
Partners 600
The average billing rate for staff is $150 per hour, and the average billing rate for partners is $320 per hour.

Prepare a professional fees earned budget for Rollins and Cohen, CPAs, for the year ending December 31, 2016.

Answer 1

ROLLINS AND COHEN, CPA PROFESSIONAL FEE EARNED BUDGET

FOR THE YEAR ENDED DECEMBER 31, 2016

SERVICE HOURS RATE TOTAL

AUDIT:

Staff 22,400 $150 $3360000

Partners 7,900 $320 $2528000

TOTAL REVENUE $5888000

TAX:

Staff 13,200 $150 $1980000

Partners 5,500 $320 $1760000

TOTAL REVENUE $3740000

SMALL BUSINESS ACCOUNTING:

Staff 3,000 $150 $450000

Partners 600 $320 $192000

TOTAL REVENUE $642000

GRAND TOTAL $10,270,000.00

Explanation: Budgeting is a process of forecasting the financial of a company. Its is a projection of the revenue and expenses of a company. This aids planning for the future.