The WongGroup (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: WG has just prepared the May 2017bills for two clients. The hours of professional time spent on each client are as follows: Read the requirements3. Requirement 1. What amounts did WG bill to South Beach Dominion and London Enterprises for May 2017? Determine the formula needed to calculate the total cost per professional for each client when WG allocates support costs at 30% of direct professional costs. (1) + ( (2) × (3) ) = Cost per professional Complete the table below to determine the amounts that WG billed to South Beach Dominion and London Enterprises for May 2017. Begin with South Beach Dominion. South Beach Dominion Direct Amount Professional Support Billed to Costs Costs Client Matthew Wong Allison Bennet Jesper Addessa Total London Enterprises Direct Amount Professional Support Billed to Costs Costs Client Requirement 2. Suppose support services were billed at $50 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 2017? Comment on the differences between the amounts billed in requirements 1 and 2. Determine the formula needed to calculate the total cost per professional for each client when WG allocates support costs at $50 per professional labor-hour. (Abbreviations used: hrs. = hours.) (4) + ( (5) × (6) ) = Cost per professional Complete the table below to determine what WG would have billed to South Beach Dominion and London Enterprises for May 2017 if support services were billed at $50 per professional labor-hour (instead of 30% of professional labor costs). Begin with South Beach Dominion. South Beach Dominion Direct Amount Professional Support Billed to Costs Costs Client Matthew Wong Allison Bennet Jesper Addessa Total London Enterprises Direct Amount Professional Support Billed to Costs Costs Client (7) (8) uses a higher proportion of Wong's time, which is (9) costly. This attracts (10) support-services charge when allocated on the basis of direct professional labor costs. Requirement 3. How would you determine whether professional labor costs or professional labor-hours is the more appropriate allocation base for WG's support services? In order to determine whether professional labor costs or professional labor-hours is the more appropriate allocation base for support services, WG should (11) 1: Data Table Professional Billing Rate per Hour Matthew Wong $450 Allison Bennet 190 Jesper Addessa 90 2: Data Table Hours per Client Professional South Beach Dominion London Enterprises Wong 23 3 Bennet 5 12 Addessa 32 45 Total 60 60 3: Requirements 1. What amounts did WG bill to South BeachDominion and London Enterprises for May 2017? 2. Suppose support services were billed at $50 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 2017? 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 support services?

The WongGroup (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: WG has just prepared the May 2017bills for two clients. The hours of professional time spent on each client are as follows: Read the requirements3. Requirement 1. What amounts did WG bill to South Beach Dominion and London Enterprises for May 2017? Determine the formula needed to calculate the total cost per professional for each client when WG allocates support costs at 30% of direct professional costs. (1) + ( (2) × (3) ) = Cost per professional Complete the table below to determine the amounts that WG billed to South Beach Dominion and London Enterprises for May 2017. Begin with South Beach Dominion. South Beach Dominion Direct Amount Professional Support Billed to Costs Costs Client Matthew Wong Allison Bennet Jesper Addessa Total London Enterprises Direct Amount Professional Support Billed to Costs Costs Client Requirement 2. Suppose support services were billed at $50 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 2017? Comment on the differences between the amounts billed in requirements 1 and 2. Determine the formula needed to calculate the total cost per professional for each client when WG allocates support costs at $50 per professional labor-hour. (Abbreviations used: hrs. = hours.) (4) + ( (5) × (6) ) = Cost per professional Complete the table below to determine what WG would have billed to South Beach Dominion and London Enterprises for May 2017 if support services were billed at $50 per professional labor-hour (instead of 30% of professional labor costs). Begin with South Beach Dominion. South Beach Dominion Direct Amount Professional Support Billed to Costs Costs Client Matthew Wong Allison Bennet Jesper Addessa Total London Enterprises Direct Amount Professional Support Billed to Costs Costs Client (7) (8) uses a higher proportion of Wong's time, which is (9) costly. This attracts (10) support-services charge when allocated on the basis of direct professional labor costs. Requirement 3. How would you determine whether professional labor costs or professional labor-hours is the more appropriate allocation base for WG's support services? In order to determine whether professional labor costs or professional labor-hours is the more appropriate allocation base for support services, WG should (11) 1: Data Table Professional Billing Rate per Hour Matthew Wong $450 Allison Bennet 190 Jesper Addessa 90 2: Data Table Hours per Client Professional South Beach Dominion London Enterprises Wong 23 3 Bennet 5 12 Addessa 32 45 Total 60 60 3: Requirements 1. What amounts did WG bill to South BeachDominion and London Enterprises for May 2017? 2. Suppose support services were billed at $50 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 2017? 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 support services?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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WG has just prepared the May 2017bills for two clients. The hours of professional time spent on each client are as follows:

Read the requirements3.

Requirement 1. What amounts did WG bill to

South Beach Dominion and London Enterprises for May 2017?

Determine the formula needed to calculate the total cost per professional for each client when WG allocates support costs at 30% of direct professional costs.

(1)

(

(2)

(3)

)

Cost per professional

Complete the table below to determine the amounts that WG billed to

South Beach Dominion and London Enterprises for May 2017. Begin with

South Beach Dominion.

	South Beach Dominion
	Direct		Amount
	Professional	Support	Billed to
	Costs	Costs	Client
Matthew Wong
Allison Bennet
Jesper Addessa
Total

London Enterprises
Direct		Amount
Professional	Support	Billed to
Costs	Costs	Client

Requirement 2. Suppose support services were billed at $50 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

2017? Comment on the differences between the amounts billed in requirements 1 and 2.

Determine the formula needed to calculate the total cost per professional for each client when WG allocates support costs at $50 per professional labor-hour. (Abbreviations used: hrs. = hours.)

(4)

(

(5)

(6)

)

Cost per professional

Complete the table below to determine what WG would have billed to

South Beach Dominion and London Enterprises for May 2017 if support services were billed at $50 per professional labor-hour (instead of 30% of professional labor costs). Begin with South Beach Dominion.

	South Beach Dominion
	Direct		Amount
	Professional	Support	Billed to
	Costs	Costs	Client
Matthew Wong
Allison Bennet
Jesper Addessa
Total

London Enterprises
Direct		Amount
Professional	Support	Billed to
Costs	Costs	Client

(7) (8) uses a higher proportion of Wong's time, which is (9) costly. This attracts (10)

support-services charge when allocated on the basis of direct professional labor costs.

Requirement 3. How would you determine whether professional labor costs or professional labor-hours is the more appropriate allocation base for WG's support services?

In order to determine whether professional labor costs or professional labor-hours is the more appropriate allocation base for support services, WG should (11)

1: Data Table

Professional	Billing Rate per Hour
Matthew Wong	$450
Allison Bennet	190
Jesper Addessa	90

2: Data Table

	Hours per Client
Professional	South Beach Dominion	London Enterprises
Wong	23	3
Bennet	5	12
Addessa	32	45
Total	60	60

3: Requirements

1.	What amounts did WG bill to South BeachDominion and London Enterprises for May 2017?
2.	Suppose support services were billed at $50 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 2017? 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 support services?

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