Blackfish and Corr (B&C) is a small accounting firm that offers services to businesses in the area. The services include Assurance Services, which include reviews of controls to help companies establish a good internal control environment; Valuation Services, which involve the valuation of an entire business or a segment of a business; and finally, Tax Strategy Services, which involve tax consultancy and preparation services. At B&C every engagement involves a Partner overseeing the completion of the contract, client contact, and the provision of expertise. All engagements also involve the work of both Junior and Senior Associates, but not at the same level of involvement. B&C also has identified Support Staff and Office Operations as two important activities in completing an engagement. Support Staff work consists of secretarial work that is directly involved in client contact, such as issuing invoices. Office Operations are other essential tasks that keep the company’s operations running smoothly, for example, maintaining subscriptions to tax law update services. As a result of reviewing the operations, B&C has established the following cost drivers for these activities: 

For the previous year, the total costs for Partners, Senior Associates, and Junior Associates and the amount of time (hours) spent on Assurance Services, Valuation Services, and Tax Strategy Services are outlined in the following table: 

These costs represent 400 engagements over the year, of which 160 were for Assurance Services, 140 were for Valuation Services, and 100 were for Strategy Services. Support Staff costs for the period were $125,000 and the Office Operations costs were $75,000. 

Requirements

1. Calculate the activity rate for all identified activities of the organization.

2. Calculate the total cost of providing each service. 

3. Calculate the cost of each client visit for each type of service. 

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Activity Partner Senior Associate Junior Associate Support Staff Office Operations Cost Driver Time (hours) Time (hours) Time (hours) Number of visits to engagements Number of visits to engagements