Activity-based costing; analysis of operations: service firm Brown and Whincup perform consulting services related to ecommerce and information systems. in Adelaide. The rm, which bills $187.50 per hour for services performed, is in a very tight local labour market and is having difculty nding quality staff. The labour cost per hour paid by Brown and Whincup for professional staff time is $67.50. Selected information follows: (a) Billable hours to clients for the year totalled 5000, consisting of: information systems services, 3100; e-commerce, 1900. (b) Administrative costs of $513 000 was (and continues to be} allocated to both consulting services based on billable hours. These costs consist of staff support, $270000: in-house computing, $204600; and miscellaneous ofce charges, $38 400. A recent analysis of staff support costs found a correlation with the number of clients served. ln-house computing and miscellaneous ofce charges varied directly with the number of computer hours logged and number of client transactions, respectively. The following table shows the number of clients, computer hours and client transactions for the e-commerce and information systems consulting services: e-commerce consulting information systems consulting Total Number of clients 50 200 250 Number of computer hours i 300 2600 4400 Number of client transactions 600 400 i 000 Required: 1. Activity-based costing (ABC) is said to result in improved costing accuracy when compared with traditional costing procedures. Briey explain how this improved accuracy is attained. 2. Assume that the rm uses traditional costing procedures. allocating total costs on the basis of billable hours. Determine the protability of the rm's e-commerce and information systems consulting services, expressing your answer both in dollars and as a percentage of activity revenue. Repeat requirement 2. using activity-based costing. Sam Whincup. one of the rm's partners, doesn't care where his professionals spend their time because. as he notes. 'Many clients have come to expect both services and we need both to stay in business. Also, information systems and e-commerce professionals are paid the same hourly rate'. Should Whincup's attitude change? Explain. 5. Is an aggressive expansion of either consulting service desirable? Briey discuss. PS\