For the past five years, Collins Ltd. has been running a consulting practice in which it provides two major services: general management consulting and executive training seminars. The CFO is not quite sure that he is charging accurate fees for the different services Collins provides. He has recently read an article about activity-based costing that convinced him he could use ABC to improve the accuracy of his costing. He has gathered the following selected information concerning the consulting practice during the previous year:

B) Using ABC, what would the CFO's charge-out rate be? Note that he will continue to add the overhead to the direct labour costs per hour on a service basis and then double this amount to set an average hourly charge-out rate.

For the past five years, Collins Ltd. has been running a consulting practice in which it provides two major services: general management consulting and executive training seminars. The CFO is not quite sure that he is charging accurate fees for the different services Collins provides. He has recently read an article about activity-based costing that convinced him he could use ABC to improve the accuracy of his costing. He has gathered the following selected information concerning the consulting practice during the previous year: Overhead Activities Planning and review Research General administration Building and equipment Clerical Cost Pools $ 700,000 114,000 1,350,000 270,000 234,000 $ 2,668,000 Activities 100,000 hours 300 journals 500 clients 1,800 square metres 30 professionals Cost Drivers Billable hours Journals purchased Number of clients Square metres occupied Professional staff In addition, the CFO gathered the following statistics for the two types of services provided to clients during the year: Executive Training Direct labour costs Billable hours Journals purchased Number of clients Square metres Professional staff Management Consulting $1,365,000 65,000 210 200 1,220 15 $700,000 35,000 90 300 580 15 (a) In the past, the CFO took the total overhead costs and divided them by the total billable hours to determine an average rate. To this amount he would then add the direct labour costs per hour and double this total amount to establish his average hourly charge-out rate. What was the CFO's average hourly charge-out rate using this method? (Round intermediate calculations to 3 decimal places, e.g. 1.525 and final answer to 2 decimal places, e.g. 15.25.) Average charge out rate $ per hour