KV Accounting and Business Consultants provides a variety of consulting services to a diverse range of clients. The company has three support departments and three revenue-generating departments, whose cost details for a typical quarter are presented below:

Morrisey & Brown, Ltd., of Sydney, Australia, is a merchandising firm that is the sole distributor of a product that is increasing in popularity among Australian consumers. The companys income statements for the three most recent months follow:

MORRISEY & BROWN, LTD. Income Statements
For the Four Quarters Ending December 31
	Quarter 1			Quarter 2			Quarter 3			Quarter 4
Sales in units		5,500			5,000			6,200			5,600
Sales revenue	A$	550,000		A$	500,000		A$	620,000		A$	560,000
Less: Cost of goods sold		330,000			300,000			372,000			336,000
Gross margin		220,000			200,000			248,000			224,000
Less: Operating expenses:
Advertising expense		22,000			22,000			22,000			22,000
Shipping expense		38,000			40,000			44,800			39,800
Salaries and commissions		84,000			80,000			94,400			90,800
Insurance expense		7,000			7,000			7,000			7,000
Depreciation expense		16,000			16,000			16,000			16,000
Total operating expenses		167,000			165,000			184,200			175,600
Net income	A$	53,000		A$	35,000		A$	63,800		A$	48,400

(Note: Morrisey & Brown, Ltd.s Australian-formatted income statement has been recast into the format common in Canada. The Australian dollar is denoted by A$.)

The existing cost allocation system is designed as follows: (1) the support department costs are allocated to the three revenue-generating departments, and (2) the revenue-generating department costs are allocated to individual clients. The support department costs are allocated to the revenue-generating departments as follows: (1) IT Support costs are allocated to Assurance, Tax Advisory, and Business Advisory using a 30:30:40 ratio, (2) Admin Support costs are allocated using a 40:30:30 ratio, and (3) Facilities Support costs are allocated using a 40:40:20 ratio. The costs accumulated in the three revenue-generating departments are allocated to individual clients based on the professional time consumed in the respective department. The Assurance, Tax Advisory, and Business Advisory departments recorded 9,100, 7,600, and 6,100 hours, respectively, for the quarter.