Sinder and Associates provides Information Systems Services and E-Commerce Consulting in Dayton, Ohio. Billable hours to clients for the year totaled 5,000, consisting of 3,100 hours for Information Systems Services and 1,900 hours for E-Commerce Consulting.

Administrative overhead costs of $342,000 are currently allocated to both services on the basis of billable hours. The firm is looking into the use of activity-based-costing (ABC) and has gathered the following information about their administrative overhead costs.

Administrative

Activities and Activity Cost Drivers Overhead Cost

Staff support (number of clients) $180,000

In-house computing (number of computer hours) 136,400

Miscellaneous office charges (number of client transactions) 25,600

Total $342,000

Expected Activity

Information E-Commerce

Systems Services Consulting

Number of clients 200 50

Number of computer hours 2,600 1,800

Number of client transactions 400 600

The administrative overhead costs that would be allocated to each billable hour of E-Commerce Consulting under traditional costing is closest to:

a. $68.40

b. $75.75

c. $56.40

d. $45.00

e. $180.00

The administrative overhead costs that would be allocated to each billable hour of E-Commerce Consulting under the activity-based costing system is closest to:

a. $68.40

b. $75.75

c. $56.40

d. $45.00

e. $80.00