Question : 11.The first budget to be prepared for a professional services : 1416275

 

11.The first budget to be prepared for a professional services firm should be the:

a.Direct expense budget.

b.Labor budget.

c.Overhead budget.

d.Revenue budget.

12.Items that should be considered in developing a revenue budget for a professional firm include all of the following except:

a.Expected new business.

b.Expected mix of professional labor hours.

c.Expected mix of work.

d.All of these should be considered in preparing a revenue budget for a professional firm.

13.Which of the following should be included in computing a revenue budget for a professional services firm?

a.Wage rates.

b.Predetermined overhead rate.

c.Billing rate.

d.Direct costs.

14.Hebert & Co. CPA’s anticipates that partners will bill 2,000 professional hours, managers will bill 7,500 professional hours and staff accountants will bill 25,000 professional hours.  Billing rates are $250, $150 and $75 for partners, managers and staff accountants, respectively.  What is Hebert & Co.’s budgeted revenue?

a.$5,462,500

b.$3,500,000

c.$5,175,000

d.$3,750,000

15.Hebert & Co. CPA’s anticipates that partners will bill 2,000 professional hours, managers will bill 7,500 professional hours and staff accountants will bill 25,000 professional hours.  Salary  rates are $100, $60 and $30 for partners, managers and staff accountants, respectively.  What is Hebert & Co.’s budgeted professional labor cost?

a.$2,185,000

b.$2,070,000

c.$2,500,000

d.$1,400,000

16.In a professional services firm, the term “overhead” refers to:

a.Expenses other than professional labor that can be traced to specific jobs.

b.Indirect labor costs.

c.Indirect expenses incurred to support the activities of the firm.

d.Indirect expenses incurred in the factory.

17.All of the operating expenses in a professional firm are:

a.Overhead costs.

b.Period costs.

c.Labor costs.

d.Product costs.

18.A professional firm’s budgeted income statement would include all of the following lines except:

a.Cost of Goods Sold.

b.Overhead.

c.Revenue.

d.Labor.

19.The practice of taking overhead costs previously in a single indirect cost pool and separating them into a number of homogeneous cost pools with separate cost drivers for each pool is:

a.Peanut-butter costing.

b.Process costing.

c.Activities-based costing.

d.Job costing.

20.There are several advantages to using activity-based costing.  Which of the following is one of these advantages?

a.Services not performed in a department are allocated a portion of the cost of operating that department.

b.Each department can choose the activity base that relates best to its cost.

c.Simplified costing is time-consuming and expensive to administer.

d.Activity-based rates are much less time-consuming to prepare.