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1. Read the following Vignette. Jean Simmons, a licensed Counsellor, provides teen counseling and executive coaching services to her clients. Jean charges a $300 fee per hour for each service. Jean uses the traditional labor- based method of allocating costs. The revenues and costs for the year are shown in the following income statement that has been prepared using direct labor-hours as the only allocation base (220 hours for teen counseling; 450 hours for executive coaching). Account Revenue Expenses Profit Rate $143.28 Teen Counseling Total $66,000 $135,000 $201,000 31,522 64,478 96,000 $34,478 $70,522 $105,000 Executive Coaching Activity Providing administrative support Traveling.... Using equipment. Additionally, Jean has kept good records of the following data in case she wants to switch to Activity-Based costing. Cost Driver Number of clients Number of visits Computer hours Activity Level Teen Executive Counseling Coaching 6 100 900 4 150 700 The revenues and costs for the year are shown in the following income statement that has been prepared using Activity- Based Costing to allocate expenses. Account Revenue Expenses: Profit Rate Administrative support $4,000 Transportation 144 Equipment. 12.50 Executive Teen Counseling Coaching Total $66,000 $135,000 $201,000 24,000 14,400 11,250 $ 16,350 16,000 21,600 8.750 $88,650 $105,000 40,000 36,000 20,000 2. Respond to the questions below. Be sure to properly cite at least one reference to support your position. a. How might Jean's decisions regarding pricing or dropping a service be altered if she were to allocate all overhead costs using activity-based costing? b. A local nonprofit charity is looking for worthy causes to support through financial grants. A primary criterion for support is financial need. Jean is thinking of applying for support for the teen counseling program. Which allocation method would give her the best chance of winning a grant? Are there any ethical implications regarding her choice?