Question - A company bills $70 per hour for accounting services and $140 per hour for tax preparation. Costs for the next year are as followed: Office Supplies-$7,000, Rent-$24,000, Secretary Salary-$45,000, Tax Software-$6,000, Total:$82,000. Thinking of changing his business structure after learning about activity-based costing he develops the following data:
|
Activity
|
Cost Driver
|
Accounting
|
Tax Prep
|
|
Office Supplies
|
Hours Billed
|
1,400
|
600
|
|
Rent
|
Services Offered
|
1
|
1
|
|
Secretary Salary
|
Number of Clients
|
50
|
200
|
|
Tax Software
|
Service Billed
|
360
|
240
|
Not wanting to change his accounting billing rate he feels like you can charge more for his tax services. Wanting to make more than $140,000 before taxes next year, what would his billing rate per hour for his tax services need to be to achieve his goal?