Target operating income, value-added costs, service company. Calvert Associates prepares architectural drawings to conform to local structural-safety codes. Its income statement for 2017 is as follows: $701,250 390,000 Revenues Salaries of professional staff (7,500 hours x $52 per hour) Travel 15,000 Administrative and support costs 171,600 576,600 Total costs Operating income $124,650 The percentage of time spent by professional staff on various activities follows: 77% Making calculations and preparing drawings for clients Checking calculations and drawings Correcting errors found in drawings (not billed to clients) Making changes in response to client requests (billed to clients) Correcting own errors regarding building codes (not billed to clients) 3 5 Total 100% Assume administrative and support costs vary with professional-labor costs.

Target operating income, value-added costs, service company. Calvert Associates prepares architectural drawings to conform to local structural-safety codes. Its income statement for 2017 is as follows: $701,250 390,000 Revenues Salaries of professional staff (7,500 hours x $52 per hour) Travel 15,000 Administrative and support costs 171,600 576,600 Total costs Operating income $124,650 The percentage of time spent by professional staff on various activities follows: 77% Making calculations and preparing drawings for clients Checking calculations and drawings Correcting errors found in drawings (not billed to clients) Making changes in response to client requests (billed to clients) Correcting own errors regarding building codes (not billed to clients) 3 5 Total 100% Assume administrative and support costs vary with professional-labor costs.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.2E: Identify cost graphs The following cost graphs illustrate various types of cost behavior: For each...

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