Germinal et Associs provides tax advice to multinational firms. Germinal charges clients for (a) direct professional time
Question:
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 hour are:
Germinal has just prepared the May 2018 bills for two clients. The hours spent on each client are as follows:
Required
1. What amounts did Germinal bill to Fortune Plassans and Au Bonheur des Dames for May 2018?
2. Suppose support services were billed at €50 per labour-hour (instead of 30% of labour costs).
How would this change affect the amounts Germinal billed to the two clients for May 2018?
Comment on the differences between the amounts billed in requirements 1 and 2.
3. How would you determine whether labour costs or labour-hours is the more appropriate allocation base for Germinal’s support services?
Step by Step Answer:
Management And Cost Accounting
ISBN: 9781292232669
7th Edition
Authors: Alnoor Bhimani, Srikant M. Datar, Charles T. Horngren, Madhav V. Rajan