Advise which method of allocating support costs is recommended i.e. the existing method or an ABC method. Justify a response by drawing from the calculations above as well as general knowledge of management accounting.

To assist with ABC costing, the following cost pools and cost drivers have been identified: Expected usage by department Bookkeeping Total Costs Activity Activity driver Total expected activity Advisory x Facility 380.00 sqm Rent, Utilities Floor Space 130.00 55.00 195.00 Technical Support #of IT requests 136.00 requests IT Support 46.00 15.00 75.00 Support Staff, Printing & Stationary, Depreciation Administrative 3,000.00 Billable hours 8.772.50 hours 3,410.00 2,362.50 Promotional activities Advertising, client entertainment 200.00 clients #Clients 73.00 19.00 108.00 Use the table below for calculations: ACTIVITY BASED COSTING ALLOCATION OF OVERHEAD COSTS Cost of activity by service Bookkeeping Activity Activity driver Expected activity Cost per activity Advisory Total Cost x Facility 58,500.00 per square meter 380.00 S 153.95 20,013.16 8,467.11 $ S S 30,019.74 Technical Support 39,600.00 humber of requests 136.00 S 291.18 S 13,394.12 $ S 4,367.65 21,838.24 74,710.97 51,760.90 Administrative 192,200.00 number of hours 8,772.50 S 21.91 65,728.13 200.00 S 372.33 27,179.77 Promotional Activities 74,465.13 number of clients $ S 40,211.17 7,074.19 S 135,298.02 S 71,669.84 S 157,797.27 Existing Allocation of Support Costs ABC Allocation of Support Costs Allocated Support costs $ Allocated Support Costs $ $ 127,373.25 Tax ax 135,298.02 Bookkeeping 111,541.88 Bookkeeping $ 71,669.84 Advisory 125,850.00 Advisory $ 157,797.27 Budgeted Profit by Service existing allocation Budgeted Profit by Service ABC allocation Net Profit $ Net Profit $ 150,268.95 Tax ax 142,344.18 Bookkeeping 10,930.13 Bookkeeping $ 50,802.16 Advisory 24,150.00 Advisory $ -$ 7,797.27