Cathedral City Services (CCS) is a not-for-profit organization offering two services in a mid-sized city. The services are "Elder Meals" and "Jobs4U." Elder Meals is a meals-on-wheels type program that delivers meals on a scheduled basis to seniors who are house-bound. Jobs4U is a jobs-training program focused on youth or adults who are looking to change careers. Participants in the program are sponsored by a local government agency, a charitable organization, or a local business. CCS charges a $240 fee per hour for each service. The revenues and costs for the year are shown in the following income statement: Revenue Expenses: CATHEDRAL CITY SERVICES General office costs Income Statement Elder Meals Jobs4U $96,000 Total $240,000 $336,000 Travel and transportation Equipment lease and maintenance Operating profit The following data have been collected concerning activities at CCS: 56,000 50,400 28,000 $201,600 Activity Level Activity General office costs Cost Driver Elder Meals Jobs4U Number of clients 100 60 Travel and transportation Number of visits 550 80 Equipment lease and maintenance Computer hours 220 900 Required a. Complete the income statement using activity-based costing and CCS's three cost drivers. b. Recompute the income statement using direct labor-hours as the only allocation base (400 hours for Elder Meals; 1,000 hours for Jobs4U). c. How might CCS's decisions regarding pricing or dropping a service be altered if the organization were to allocate all overhead costs using direct labor-hours? d. Under what circumstances would the labor-based allocation and activity-based costing (using CCS's three cost drivers) result in similar profit results? e. A regional government agency is looking for worthy causes to support through financial grants. A primary criterion for support is financial need. CCS is thinking of applying for support for the Elder Meals program. Which allocation method would give CCS the best chance of winning a grant? Would it be ethical for CCS to report the income using this method in their application