Question

Bacon Financial Advisors provides accounting and finance assistance to customers in the retail business. Bacon has four professionals on staff and an office with six clerical staff. Total​ compensation, including​ benefits, for the professional staff runs about​ $575,000 per​ year, and normal billable hours are​ 8,200 hours per year. The professional staff keep detailed time sheets organized by client number. The total office and administrative costs for the year are​ $754,000. What is the direct labor rate for the professional​ staff? (Round your answer to the nearest​ cent.)

Answer 1

Answer:

$70.12

Explanation:

Given that,

Total​ compensation, including​ benefits, for the professional staff runs about = $575,000 per year

Normal billable hours =​ 8,200 hours per year

Total office and administrative costs for the year =​ $754,000

Direct labor rate for the professional​ staff:

= (Total direct cost ÷ Billable hours)

= ($575,000 ÷ 8,200 hours per year)

= $70.12