Question : 3.Domino Consulting has two departments, Information Technology Consulting and General : 1416279

 

3.Domino Consulting has two departments, Information Technology Consulting and General Business Consulting.  The firm has Partners, Senior Consultants and Junior Consultants in each department.  The firm is preparing its budgets for the upcoming year.

The controller received the following information from the marketing department about anticipated demand for the firm’s products in the upcoming year:

 

Department:Total Professional Hours:

Information Technology32,000

General Business40,000

 

The controller then worked with the human resources department to determine the following information about staffing and salary rates for each department:

Information TechnologyGeneral Business

Ratio of partner hours: senior consultant hours: junior consultant hours

 

1:2:7

 

1:2.5:6.5

Salary Rates per hour:

Partner$150$125

Senior Consultant$75$60

Junior Consultant$40$30

 

The controller has also determined that in order to be profitable, billing rates should be three times the amount paid to employees.  The marketing department has determined that billing rates computed on that basis are comparable to what other consulting firms charge.

 

(a)Prepare a revenue budget for Domino Consulting Company.

 

(b)Prepare a labor budget for Domino Consulting Company.

4.Frederick and Ivey, CPA have the following budgeted items for the month of July:

Depreciation - equipment$2,500

Fringe benefits5,000

Lease expense3,000

Professional salaries (from budget)10,000

Professional dues and subscriptions1,500

Revenues (from budget)35,000

Utilities1,000

Secretarial support2,800

Travel1,200

 

Prepare a budgeted income statement for the month of July.