Reference no: EM132948782

Question - 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 $91,200. 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:

Business Return Complex Individual Return Simple Individual Return

Partner 0.4 hour 0.07 hour - Manager 0.1 hour 0.13 hour - Senior consultant 0.5 hour 0.40 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 $59,500 each. All other operating data remain unchanged. The manager will share 10% of any profit over $600,000 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.