The Walliston Group (WG) provides tax advice to multinational firms. WG charges clients for (a) Direct professional time (at an hourly rate) and (b) Support services (at 30% of the direct professional costs billed).
The three professionals in WG and their rates per professional hour are as follows:
Professional & Billing Rate per Hour Max
Walliston $640
Alexa Boutin 220
Jacob Abbington 100
WG has just prepared the May 2011 bills for two clients.
The hours of professional time spent on each client are as follows:
| Professionnal |
San Antonio Dominion |
Amsterdam Enterprises |
| WILMER |
21 |
3 |
| BENNET |
4 |
11 |
| AMESBURY |
30 |
41 |
| TOTAL |
55 |
55 |
1. What amounts did WG bill to San Antonio Dominion and Amsterdam Enterprises for May ?
2. Suppose support services were billed at $75 per professional labor-hour (instead of 30% of professional labor costs). How would this change affect the amounts WG billed to the two clients for May? Comment on the differences between the amounts billed in requirements 1 and 2.
3. How would you determine whether professional labor costs or professional labor-hours is the more appropriate allocation base for WG's supportservices?