Green LLC is a law practice. There is one lawyer (Green) and one assistant. Green wants to develop a more accurate costing and pricing system for the firm's services using time-driven activity-based costing. The firm's budgeted 2023 income statement is as follows: Green LLC Budgeted Income Statement For the Year Ended December 31, 2023 Professional fees Real estate $ 90,000 Corporate reorganizations Total revenue 450,000 540,000 Fixed expenses Salary-lawyer $120,000 Salary - assistant 48,000 168,000 Supplies 20,000 Utilities and rent 30,000 Communications 12,000 Client relations Income before income taxes 6,000 236,000 304,000 Income tax expense Net income 76,000 $228,000 Budgeted real estate files for the year are 150. Budgeted corporate reorganization files for the year are 15. Total estimated annual working hours per employee are 2,000 (40 hrs./week x 50 weeks). Estimated hours to be billed each year are as follows: Green Assistant Total Real estate 300 1,800 2,100 Corporate reorg. 1,500 0 1,500 Non-billable 200 200 400 2,000 2,000 4,000 Assume that Green and the assistant are the resources that generate fixed expenses, and that office space and relevant expenses are allocated as follows: Allocation basis Green Assistant Total Space (m) 15 10 25 Supplies 30% 70% 100% Communications 60% 40% 100% Client relations 100% 100% Required: 1. Prepare cost pools for Green and the assistant. Use the following format: Salaries Supplies Utilities and rent Communications Client relations Green Assistant Total $168,000 20,000 30,000 12,000 6,000 $236,000 2. Determine the capacity cost rates. Use the following format: Green Assistant Total cost pool (a) Total $236,000 Total hours (b) 2,000 2,000 Capacity cost rate (a/b) 3. Revise Green LLC's income statement to show separate columns for fees from real estate, corporate reorganizations, and in total. Allocate each employee's cost pool to the two client types (real estate and corporate reorganizations). Calculate pre-tax profit percentage. Use the following format: Un- Real estate Corp. allocated Total reorg. Fees revenue (a) Total $540,000 $540,000 Fixed expenses Green Assistant Inc. before taxes (b) Inc. tax expense Net income Pre-tax profit % (b/a) 4. Comment on the results. (236,000) 304,000 (76,000) $228,000 5. Determine average mark-up on fixed costs needed to generate the same budgeted net income ($228,000). 6. Calculate the hourly charge-out rates for Green and the assistant. Use the following format: Capacity cost rate (a) Required mark-up (b) Green Assistant Charge-out rate (a x b) 7. Recalculate the budgeted income statement based on the charge- out rates calculated above. Show that pre-tax profit for each product line is now the same. 8. Calculate the time equation for each type of client.