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Kelly and Logan , an accounting firm , provides consulting and tax planning services . A recent analysis found that 65% of the firm's billable

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Kelly and Logan , an accounting firm , provides consulting and tax planning services . A recent analysis found that 65% of the firm's billable hours to clients resulted from tax planning and for many years , the firm's total administrative cost ( currently $250,100 ) has been allocated to services on this basis The firm , contemplating a change to activity - based costing , has identified three components o is of administrative cost as follows : Staff support $180.000 In - house computing charges 50.000 Miscellaneous office costs 20.000 Total $250.000 A recent analysis of staff support found a strong correlation with the number of clients served consulting 20 ; tax planning , 60 ) . In contrast , in- house computing and miscellaneous office cost varied directly with the number of computer hours logged and number of client transactions , respectively . Consulting consumed 30% of the firm's computer hours and had 20% of the total client transactions 32 . Assuming the use of activity - based costing , the proper percentage to use in allocating staff support costs to tax planning services is A . 20 % B . 60% C . 650 % D. 750% E. 80% Answer : D 10: 4 Type : A

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