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Clark and Shiffer LLP perform activities related to e-commerce consulting and information systems in Vancouver, British Columbia. The firm, which bills $166 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 $166 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 $76. Selected information follows. Billable hours to clients for the year totaled 8,600, consisting of: information systems services, 5,160, e-commerce consulting, 3,440 Administrative cost of $420,760 was (and continues to be) allocated to both services based on billable hours. These costs consist of staff support, $224,160; in-house computing, $158,000, and miscellaneous office charges, $38,600 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: Information E-Commerce Systems Consulting Services Total Number of clients 80 260 340 Number of computer hours 2,360 3,810 6,170 Number of client transactions 850 740 1,590 Required: 2. Assume that the firm uses traditional costing procedures, allocating total costs on the basis of billable hours. Determine the profitability of the firm's 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.) Income Department Total Billings Profitability E-Commerce Consulting Information systems
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