Garza And Neely CPAs Are Preparing Their Service Reve 291205

Garza And Neely Cpas Are Preparing Their Service Revenue

Garza and Neely, CPAs, are preparing their service revenue (sales) budget for the coming year (2012). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below. Department Quarter 1 Quarter 2 Quarter 3 Quarter 4 Auditing 2,000 2,770 Tax 3,000 3,740 Consulting 1,500 1,750 Average hourly billing rates are: auditing $84, tax $93, and consulting $102. Prepare the service revenue (sales) budget for 2012 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.

Paper For Above instruction

The service revenue budget for Garza and Neely, CPAs, for the year 2012 provides a strategic financial forecast based on billable hours across three departments: auditing, tax, and consulting. Accurately projecting revenue is crucial for resource allocation, staffing, and overall business planning. In this context, the analysis involves calculating quarterly revenues for each department and the total annual revenue, considering specific billable hours and corresponding billing rates.

Budgeted Service Revenue Analysis

For the auditing department, billable hours are projected as 2,000 hours in Quarter 1 and 2,770 hours in Quarter 2. Although the original problem states missing data for Quarters 3 and 4, for illustrative purposes, let’s assume the hours are 2,500 for Quarter 3 and 3,000 for Quarter 4. The billing rate for auditing is $84 per hour. Therefore, quarterly revenues for auditing are computed by multiplying billable hours by the billing rate:

  • Quarter 1: 2,000 hours x $84 = $168,000
  • Quarter 2: 2,770 hours x $84 = $232,680
  • Quarter 3: 2,500 hours x $84 = $210,000
  • Quarter 4: 3,000 hours x $84 = $252,000
  • Annual total: Sum of all quarterly revenues = $862,680

The tax department's billable hours are set at 3,000 in Quarter 1 and 3,740 in Quarter 2, with assumed hours of 3,200 for Quarter 3 and 3,600 for Quarter 4. Its billing rate is $93 per hour, leading to:

  • Quarter 1: 3,000 x 93 = $279,000
  • Quarter 2: 3,740 x 93 = $348,-charge
  • Quarter 3: 3,200 x 93 = $297,600
  • Quarter 4: 3,600 x 93 = $334,800
  • Annual total: $1,259,200

For consulting, billable hours are 1,500 in Quarter 1 and 1,750 in Quarter 2, with estimates of 1,600 for Quarter 3 and 1,800 for Quarter 4. The billing rate is $102:

  • Quarter 1: 1,500 x 102 = $153,000
  • Quarter 2: 1,750 x 102 = $178,500
  • Quarter 3: 1,600 x 102 = $163,200
  • Quarter 4: 1,800 x 102 = $183,600
  • Annual total: $678,300

Summarizing, the service revenue budget for 2012 across all departments is as follows:

Total Revenue by Department

  • Auditing: $862,680
  • Tax: $1,259,200
  • Consulting: $678,300

Total combined service revenue for the year is approximately $2,800,180. This budget provides a foundational forecast for financial planning and resource allocation, enabling Garza and Neely to set targets and monitor performance throughout 2012.

References

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