1. : IBM and Microsoft allocate their service industry costs using activity-based costing. The following table summarizes the costs and cost drivers:

Activity	IBM Total Cost ($)	Cost Driver	Cost Driver Quantity	Microsoft Total Cost ($)
Client Support	$1,200,000	Number of clients	2,000 clients	$1,000,000
Consulting Hours	$1,500,000	Billable hours	30,000 hours	$1,300,000
Software Updates	$800,000	Number of updates	10,000 updates	$700,000
Total	$3,500,000			$3,000,000

• IBM served 1,500 clients, and Microsoft served 2,500 clients during the year.
• Allocate service industry costs per client and per billable hour for IBM and Microsoft using activity-based costing.
• Discuss how differences in consulting hours impact IBM's and Microsoft's service delivery capabilities and cost management.