Clark and Shiffer LLP perform activities related to e commerce consulting and information systems in Vancouver, British Columbia The firm, which bills $148 per hour for services performed, is in a very tight local labor market and is having difficulty finding quality help for its overworked professional staff The cost per hour for professional staff time is $58 Selected information follows Billable hours to clients for the year totaled 6,800, consisting of information systems services, 4,080 e commerce consulting, 2,720 Administrative cost of $393,760 was (and continues to be) allocated to both services based on billable hours These costs consist of staff support, $212,280 in house computing, $149,000 and miscellaneous office charges, $32,480 A recent analysis of staff support costs found a correlation with the number of clients served In house computing and miscellaneous office charges varied directly with the number of computer hours logged and number of client transactions, respectively A tabulation revealed the following data E Commerce Consulting Information Systems Services Total Number of clients 80 260 340 Number of computer hours 2,180 3,180 5,360 Number of client transactions 760 560 1,320 Required 2 Assume that the firm uses traditional costing procedures, allocating total costs on the basis of billable hours Determine the profitability of the firms e commerce and information systems activities, expressing your answer both in dollars and as a percentage of activity revenue (Do not round intermediate calculations Round Profitability to 2 decimal places ) E commerce total billing income profitability information system 3 Using activity based costing, determine the profitability of the firms e commerce and information systems activities, expressing your answer both in dollars and as a percentage of activity revenue (Round intermediate calculations and final answers to 2 decimal places ) department total billing income profiability ecommerce information systems 4 Stephen Shiffer, one of the firms partners, doesnt 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 Shiffers attitude change

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 16, 2024

Clark and Shiffer LLP perform activities related to e-commerce consulting and information systems in Vancouver, British Columbia. The firm, which bills $148 per hour for

Clark and Shiffer LLP perform activities related to e-commerce consulting and information systems in Vancouver, British Columbia. The firm, which bills $148 per hour for services performed, is in a very tight local labor market and is having difficulty finding quality help for its overworked professional staff. The cost per hour for professional staff time is $58. Selected information follows.

	Billable hours to clients for the year totaled 6,800, consisting of: information systems services, 4,080; e-commerce consulting, 2,720.
	Administrative cost of $393,760 was (and continues to be) allocated to both services based on billable hours. These costs consist of staff support, $212,280; in-house computing, $149,000; and miscellaneous office charges, $32,480.

A recent analysis of staff support costs found a correlation with the number of clients served. In-house computing and miscellaneous office charges varied directly with the number of computer hours logged and number of client transactions, respectively. A tabulation revealed the following data:

	E-Commerce Consulting	Information Systems Services	Total
Number of clients	80	260	340
Number of computer hours	2,180	3,180	5,360
Number of client transactions	760	560	1,320

Required:

Assume that the firm uses traditional costing procedures, allocating total costs on the basis of billable hours. Determine the profitability of the firms e-commerce and information systems activities, expressing your answer both in dollars and as a percentage of activity revenue. (Do not round intermediate calculations. Round "Profitability" to 2 decimal places.)

E-commerce	total billing	income	profitability
information system

3.	Using activity-based costing, determine the profitability of the firms e-commerce and information systems activities, expressing your answer both in dollars and as a percentage of activity revenue. (Round intermediate calculations and final answers to 2 decimal places.)

department	total billing	income	profiability
ecommerce
information systems

Stephen Shiffer, one of the firms partners, doesnt 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 Shiffers attitude change?