Answer:
NUMBER 1
(A) For San Antonio Dominion,
Total Bill = $17,264
(B) For Amsterdam Enterprises,
Total Bill = $8,112
NUMBER 2
(A) San Antonio Dominion - $16,305
(B) Amsterdam Enterprises - $9,265
NUMBER 3
How to determine the more appropriate S.S. allocation base, between
- Professional Labour Cost
- Professional Labour Hours
The more appropriate allocation base will consider both
- Profit made by WG
- Allocation Base that will keep both clients (or the most clients).
NUMBER 4
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.
This is simply the formula used in Requirement 1. Total Cost per professional per client, for Requirement 1 is:
(Hourly rate/cost for Mark Wilmer × Number of hours spent on each client) + (Hourly rate for Ashley Bennet × number of hours spent on each client) + (Hourly rate for John Amesbury × number of hours spent on each client) + 30% of the above sum.
EXPLANATION:
NUMBER 1
(A) SAN ANTONIO DOMINION
Direct Professional Time Cost:
(21×500) + (4×170) + (30×70) = 10,500 + 680 + 2100 = $13,280
Support Services:
30/100 × 13,280 = $3,984
Total Bill:
13,280 + 3,984 = $17,264
(B) AMSTERDAM ENTERPRISES
Direct Professional Time Cost:
(3×500) + (11×170) + (41×70) = 1500 + 1870 + 2870 = $6,240
Support Services:
30/100 × 6,240 = $1,872
Total Bill:
6240 + 1872 = $8,112
NUMBER 2
(A) SAN ANTONIO DOMINION
Support Services:
$55/hour × 55hours = $3,025
Total Bill:
13,280 + 3,025 = $16,305
(B) AMSTERDAM ENTERPRISES
Support Services:
$55/hour × 55hours = $3,025
Total Bill:
6,240 + 3,025 = $9,265
NUMBER 3
Looking at the SS (Support Services) formula that fetches more profit for WG,
Requirement 1
Total profit: 17,264 + 8,112 = $25,376
Requirement 2
Total profit: 16,305 + 9,265 = $25,570
Formula 2 earns WG more profit but since the difference in not much, WG can retain formula 1, in order to help Amsterdam Enterprises.
KUDOS!
