Question
Exercise 9-32 Activity-Based versus Traditional Costing-Ethical Issues (LO 9-3, 4, 5) Wendy Chen established Windy City Coaching (WCC) to provide teen counseling and executive coaching
Exercise 9-32 Activity-Based versus Traditional Costing-Ethical Issues (LO 9-3, 4, 5) Wendy Chen established Windy City Coaching (WCC) to provide teen counseling and executive coaching services to its clients. WCC charges a $300 fee per hour for each service. The revenues and costs for the year are shown in the following income statement: WINDY CITY COACHING Income Statement Teen Counseling Executive Coaching Total Revenue $ 72,000 $ 138,000 $ 210,000 Expenses: Administrative support 36,900 Transportation, etc 42,000 Equipment 16,500 Profit $ 114,600 WCC has kept good records of the following data for cost allocation purposes: Activity Level Activity Cost Driver Teen Counseling Executive Coaching Providing administrative support Number of clients 6 3 Traveling Number of visits 120 160 Using equipment Computer hours 800 700 Required: (a) Complete the income statement using activity-based costing and WCCs three cost drivers. Recompute the income statement using direct labor-hours as the only allocation base (220 hours for teen counseling; 480 hours for executive coaching).
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