I'm having trouble determining the profitability of the firm's information systems services and e-commerce consulting activities in problem 3. Could you help me solve this problem? I'm confused by the activity-based costing system and need to find the total billings, income, and profitability percentage. ### Activity-Based Costing Analysis for Information Systems and E-commerce Consulting3. **Instruction**: Assume that the firm uses activity-based costing. Determine the profitability of the firm’s information systems and e-commerce activities, expressing your answer both in dollars and as a percentage of activity revenue.4. **Discussion Point**: Jeffrey Grady, a partner at the firm, notes that many clients expect both services. He believes it is essential for business sustainability and mentions that professionals in both areas receive the same hourly rate. Should this perspective on resource allocation be reconsidered?#### TaskComplete this analysis by entering your answers in the tabs provided below.#### Analysis Table| Department | Total Billings | Income | Profitability ||--------------------------------|----------------|--------|---------------|| Information systems services | | | % || E-commerce consulting | | | % |- **Instructions**: Assume the firm utilizes activity-based costing to determine the profitability of its services. Provide answers rounded to two decimal places.#### Navigation- **Previous Requirement** | **Next Requirement** # Problem 5-50 Activity-Based Costing; Analysis of OperationsGrady and Associates performs various activities related to information systems and e-commerce consulting in Toronto, Canada. The firm bills $168 per hour for services performed, operates in a tight labor market, and struggles to find quality help for its busy staff. The cost per hour for professional staff time is $78. Below is selected information:- **Billable hours to clients for the year:** 8,800 total (information systems services: 5,280; e-commerce consulting: 3,520).- **Administrative cost:** $423,760, allocated to services based on billable hours, including: - Staff support: $225,480 - In-house computing: $159,000 - Miscellaneous office charges: $39,280A recent analysis linked staff support costs to the number of clients served, while in-house computing and office charges varied with the number of computer hours and client transactions:| | Information Systems Services | E-Commerce Consulting | Total ||-------------------------|------------------------------|-----------------------|-------|| **Number of clients** | 265 | 85 | 350 || **Number of computer hours** | 3,880 | 2,380 | 6,260 || **Number of client transactions** | 760 | 860 | 1,620 |### Required Analysis2. **Traditional Costing:** Assume the firm uses traditional costing, allocating total costs based on billable hours. Determine the profitability of each activity in dollars and as a percentage of activity revenue.3. **Activity-Based Costing:** Assume the firm uses activity-based costing. Determine profitability in dollars and as a percentage of activity revenue for each activity.4. **Partner's View:** Jeffrey Grady, a partner, believes staff time is irrelevant since clients expect both services. He points out that both information systems and e-commerce professionals are paid the same hourly rate. Consider whether Grady's perspective should change.

Activity based costing is a method and type of costing, in which all indirect costs and indirect…

I'm having trouble determining the profitability of the firm's information systems services and e-commerce consulting activities in problem 3. Could you help me solve this problem? I'm confused by the activity-based costing system and need to find the total billings, income, and profitability percentage.

I'm having trouble determining the profitability of the firm's information systems services and e-commerce consulting activities in problem 3. Could you help me solve this problem? I'm confused by the activity-based costing system and need to find the total billings, income, and profitability percentage.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The statement of financial position and the balance sheet are synonyms. Select one: a. False b. True Refers to the recording, presentation, and analysis of manufacturing costs. Select one: a. No correct answer b. Financial Accounting c. Auditing d. Cost Accounting Accounting deals with quantifiable information. Select one: a. True b. False
A segment of a business responsible for both revenues and expenses would be called: Multiple Choice a cost center. a profit center. residual income. an investment center.
Which of the following is NOT an objective of determining product costs for manufacturing firms? A) To determine selling prices B) to reduce operating leverage C) to make decisions D) to do financial reporting
Customer relationship management software would be most likely to affect which income statement account? Multiple Choice Cost of Goods Sold Revenues Selling, General, and Administrative Expenses (SG&A) Interest Expense
please answer in detail, with three example
Identify the major problems in this situation and explain how they impact the organization. You will need to consider both behavioral and analytical factors. Specifically, how might managerial accounting concepts, tools, or techniques be applied to help resolve this dilemma? What are possible consequences of applying the same to this dilemma? Briefly explain Orange Electronics has been experiencing declining profit margins and has been looking for ways to increase operating income. It cannot raise selling prices for fear of losing business to its competitors. It must either cut costs or improve productivity. The company uses a standard cost system to evaluate the performance of the soldering department. It investigates all unfavorable variances at the end of the month. The soldering department rarely completes the operations in less time than the standard allows (which would result in a favorable variance). In most months, the variance is zero or slightly unfavorable. Reasoning that…
Which of the following statements is true? I. A packaging department is most likely a cost center. II. In a profit center, the manager is most likely in-charge of investments, revenues and costs. III. The cafeteria in the college is most likely a profit center. IV. A business unit within a business is an example of a revenue center a. All but II b. I only c. All statements are true d. All but II and III e. I and II only Clear my choice
Which of the following statements about responsibility accounting are correct? Select one: a. Responsibility accounting systems differ widely across organizations. b. The structure for accumulating cost information generally mirrors the structure for accumulating responsibility center information. c. Responsibility accounting is the primary responsibility of accounting staff.
1. What is not a cloud computing benefit? a) Accessibility improvement b) Safer storge c) A and B d) Increase cost 2. Cost that cannot be conveniently and economically traced to a cost objected is a) Direct cost b) Fixed cost c) Indirect cost d) None of above 3. Price decisions and customer profitability are an example of strategic management accounting. a) True b) False 4. Information that is required across various types of a company structure is not significantly varied. a) True b) False 5. What are internal Sources of information: a) Previous Financial statements b) Internet c) Customers
What does a consistently negative responsibility marginimply will happen to the operating income of the business ifthe center is closed? Why? Identify several other factors thatshould be considered in deciding whether or not to close thecenter.
B) The C.E.O. explains that the company is facing severe competition in the market place and has heard about the use of Cost Volume Profit Analysis to assist in the decision making process. He is however unsure about the analysis and how it can be of use in the business, and is seeking your help to determine: 1) What is C.V.P. Analysis and how it can be used to improve the profitability of the business. The C.E.O. then asks your advice on two sets of actions currently being considered by the company to increase its Net Income. The company currently has sales of $ 350,000, representing 5,000 units. Its variable costs are $ 250,000 and the fixed costs are $ 60,000. The alternatives being considered are: a) Increase Selling Price by 10% b) Reduce variable cost to 70% of Sales. You are asked to: 1) Compute the Net Income that will be earned under each alternative. 2) Advise the CEO as to which alternative would best suit the company's requirements.
Which of the following is one of the difference between management accounting and cost accounting. Select one: O a. Management accounting is based on double entry system but not cost accounting b. Management accounting used for decision making but cost accounting used for cost ascertainment O c. Management accounting is limited for internal use whereas cost accounting for external use d. Management accounting is optional but cost accounting is mandatory