Question
Terri Martin, CPA provides bookkeeping and tax services to her clients. She charges a fee of $86 per hour for bookkeeping and $129 per hour
Terri Martin, CPA provides bookkeeping and tax services to her clients. She charges a fee of $86 per hour for bookkeeping and $129 per hour for tax services. Martin estimates the following costs for the upcoming year: |
Office supplies | $21,200 |
Computer fees | 29,200 |
Secretary's salary | 43,000 |
Rent | 21,900 |
| |
| $115,300 |
|
Operating profits declined last year and Ms. Martin has decided to use activity-based costing (ABC) procedures to evaluate her hourly fees. She gathered the following information from last year's records: |
|
| Activity Levels | |
Activity | Cost Driver | Bookkeeping | Tax Services |
Office supplies | Hours billed | 1,200 | 800 |
Computer fees | Computer hours used | 400 | 600 |
Secretar's salary | Number of clients | 16 | 84 |
Rent | Types of services offered | 1 | 1 |
Martin wants her hourly fees for the tax services to be 160% of their activity-based costs. What is the fee per hour for tax services in the upcoming year? |
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