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Leary and O$$Donnell$,$ a local CPA firm, has been asked to bid on a contract to perform audits for three counties in its home state. Because existing staff are fully scheduled, if the firm is awarded the contract, it must hire one new staff member at a salary of $$69,000$ to handle the additional workload. The managing partner is convinced that obtaining the contract will lead to additional new clients from the respective counties. Expected new work $($excluding the three counties$)$ is $920$ hours at an average billing rate of $$90$ per hour. Other information follows about the firm$$s current annual revenues and costs:

Firm volume in hours $($normal$)30,750$

Fixed costs $ $575,000$

Variable cost $ $35$ per hour

Should the firm win the contract, the audits of the three counties will require $780$ hours of expected work.slems

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Leary and O'Donnell, a local CPA firm, has been asked to bid on a contract to perform audits for three counties in its home state. Because existing staff are fully scheduled, if the firm is awarded the contract, it must hire one new staff member at a salary of $$69,000$ to handle the additional workload. The managing partner is convinced that obtaining the contract will lead to additional new clients from the respective counties. Expected new work $($excluding the three counties$)$ is $920$ hours at an average billing rate of $$90$ per hour. Other information follows about the firm's current annual revenues and costs:Should the firm win the contract, the audits of the three counties will require $780$ hours of expected work.

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