Homwork Accounting Help- Don't Understand Answer Given?

Hi,
Ok the short version of the question is:

Bruce wants to outsource tax return part of business. Calculate if it is benifitial...
At present, Bruce charges $150 p/hr for consulting & $60 p/hr
for tax returns-based on 1200 billable hours per year.
If outsources, less $7360 overheads

Answer-
Increase In Revenue:
Billable hours 1200 x $90 (150-60) = $ 108 000
Aviodable overhead costs = $ 7 360

Total Increase In Revenue = $ 115 360

* I don't understand why they subtract 150 from 60? What does it give?

Thanks

You are correct: the problem is fatally flawed, in that the billable hours are not divided into tax and consulting hours. The moron who constructed the problem then tried to dance around his error by subtracting the tax hourly from the consulting hourly to arrive at a figure of $90 which bears no relation to the problem at all.

As far as i understand i try to help u.total charge for consulting is $150 p/hr while $60 p/hr in it for tax return which he do not want to outsource so cost of a hour =total cost - tax return=150-60.
thinking of outsorceing tax work.I am ready for the job.contact me at usqoutsourceindia@yahoo.com Report It