Alternative allocation bases for a professional services firm. (15 minutes) Germinal et Associs provides tax advice to

Alternative allocation bases for a professional services firm. (15 minutes) Germinal et Associés provides tax advice to multinational firms.

Germinal 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 Germinal and their rates per professional hour are

Germinal has just prepared the May 1999 bills for two clients. The hours of professional time spent on each client are as follows:

REQUIRED 1. What amounts did Germinal bill to Fortune Plassans and Au Bonheur des Dames for May 1999?
2. Suppose support services were billed at EUR 50 per professional labour-hour Cinstead of 30% of professional labour costs). How would this change affect the amounts Germinal billed to the two clients for May 1999? Comment on the differences between the amounts billed in requirements 1 and 2.
3. How would you determine whether professional labour costs or professional labour-hours is the more appropriate allocation base for Germinal’s support services? mki4

Transcribed Image Text:

PROFESSIONAL Thrse Raquin Jeanne Rozerot Claude Bernard. BILLING RATE PER HOUR EUR 500 120 80