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QUESTION 2 2 points Bridges and Lloyd, an accounting firm, provwdes consulting and tax planning services. For many years, the firm's total administrative cost currently
QUESTION 2 2 points Bridges and Lloyd, an accounting firm, provwdes consulting and tax planning services. For many years, the firm's total administrative cost currently S250,000 has been allocated to ser ces on the basis billable hours to clients A recent analysis found that 65% of the firm's bilable hours to clients resulted from tax planning services, while 35% resulted from consulting serices. The firm, contemplating a change to actvity-based costing, has identfied three components of administrative cost, as follows Staff Support In-house computing charges Miscellaneous office costs Total S 180,000 50,000 20,000 250,000 A recent analysis of staff support found a strong correlation between the number of staff personnel and 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 o client transactions respectrely Consating consumed 3 % o the firms computer hours and had 20% of the total client transactions. Assuming the use of activity-based costing, the proper percentage to use in allocating staff support costs to tax planning services is 20% 60% 80% 65%. 75%
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