Income Statement, Cost of Services Provided, Service Attributes Mason, Durant, and Westbrook (MDW) is a tax services firm. The firm is located in Oklahoma City and employs 15 professionals and eight staff. The firm does tax work for small businesses and well-to-do individuals. The following data are provided for the last fiscal year. (The Mason, Durant, and Westbrook fiscal year runs from July 1 through June 30.) Returns processed Returns in process, beginning of year 3,000 144,000 Returns in process, end of year 13,000 Cost of services sold 1.577,500 Beginning direct materials inventory 20,000 Purchases, direct materials 40,000 Direct labor 1,400,000 Overhead 100,000 Administrative expenses 257,000 Selling expenses 5,000 Required: 1. Prepare a statement of cost of services sold. Mason, Durant, and Westbrook Statement of Cost of Services Sold For the Year Ended June 30 Cost of services sold 2. Refer to the statement prepared in Requirement 1. What is the dominant cost? Will this always be true of service organizations? The situation above might be the case because: 2. Refer to the statement prepared in Requirement 1. What is the dominant cost? Will this always be true of service organizations? The situation above might be the case because: 3. Assuming that the average fee for processing a return is $850, prepare an income statement for Mason, Durant, and Westbrook. Mason, Durant, and Westbrook Income Statement For the Year Ended June 30 Less operating expenses: 4. How does the amount of total units factor into the calculation of average cost? When required, round your answer to the nearest dollar. per return How do the differences between services and tangible products affect the ability of MDW to use the last year's average cost of preparing a tax return in budgeting the cost of tax return services to be offered next year