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Emerson & Company is an architectural firm specializing in home remodelling for private clients and new office buildings for corporate clients.

Emerson & Company charges customers at a billing rate equal to 143% of the client's total job cost. A client's total job cost is a combination of (1) professional time spent on the client

($70 per hour cost of employing each professional) and (2) operating overhead allocated to the client's job. Emerson allocates operating overhead to jobs based on professional hours spent on the job. Emerson estimates its five professionals will incur a total of 10,000 professional hours working on client jobs during the year.

Amy Lee hired Emerson & Company to remodel her kitchen. A total of 30 professional hours were incurred on this job. In addition, Amy's remodelling job required one of the professionals to travel back and forth to her house for a total of 132 km. The blueprints had to be copied four times because Amy changed the plans several times. In addition, 27 hours of secretarial time were used lining up the subcontractors for the job.

Requirements.

1.	Calculate the current indirect cost allocation rate per professional hour.
2.	Calculate the amount that would be billed to Amy Lee given the current costing structure.
3.	Calculate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs.
4.	Calculate the amount that would be billed to Amy Lee using ABC costing.
5.	Which type of billing system is fairer to clients? Explain.

Options for Requirement 5

a)ABC or Traditional , b) The direct labour hours on the job or The resources they used or Total hours on the job c)not expensive or very expensive d) a set one time fee or according to the number of. e) operating or receiving or selling

10 lav Data Table X plans - All operating costs other than professional salaries (travel reimbursements, copy costs, secretarial salaries, office lease, and so forth) can be assigned to the three activities. Total activity costs, cost drivers, and total usage of those cost drivers are estimated as follows: Total Usage by Corporate Clients Total Usage by Private Clients Activity Transporation to clients $ Total Activity Cost Cost Driver 12,000 Round-trip mileage to clients 38,000 Number of copies 199,000 Secretarial time Blueprint copying Office support 7,500 kilometres 750 copies 2,600 secretarial hours 7,500 km 250 copies 2,400 secretarial hours $ Total operating overhead 249,000 Print Done Requirement 1. Calculate the current indirect cost allocation rate per professional hour. (Round your answer to the nearest cent.) The current indirect cost allocation rate per professional hour is $ Requirement 2. Calculate the amount that would be billed to Amy Lee given the current costing structure. Determine the formula, then calculate the amount that would be billed to Amy Lee given the current costing structure. (Round all calculations to the nearest cent.) Operating overhead x Year's total professional hours = Amount billed to client Requirement 3. Calculate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs. Determine the formula, then calculate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs. (Round your final answers to the nearest cent.) Activity allocation rate Transportation to clients / kom Blueprint copying I copy Office support secretarial hour = Requirement 4. Calculate the amount that would be billed to Amy Lee using ABC costing. Determine the formula, then calculate the amount that would be billed to Amy Lee using ABC costing. (Round all calculations to the nearest cent.) = Amount billed to client Requirement 5. Which type of billing system is fairer to clients? Explain. The billing system should be fairer to clients because they are charged according to For example, copying blueprints is Under the fairer system, clients are charged by each unique client job blueprint copies that their job required. The fairer system better recognized the extent to which costs are incurred Choose from any list or enter any number in the input fields and then continue to the next