The accounting firm Crow and Krause provides consulting and tax planning services. Historically, the firm's total administrative cost (currently $315,000) has been allocated to services on this basis of billable hours to clients. A recent analysis found that 55% of the firm's billable hours to clients resulted from tax planning services, while 45% resulted from consulting services.

Contemplating a change to activity-based costing, the firm has identified three components of administrative cost, as follows:

Staff Support	$ 215,000
In-house computing charges	65,000
Miscellaneous office costs	35,000
Total	$ 315,000

A recent analysis of staff support found a strong correlation with the number of clients served. In contrast, in-house computing and miscellaneous office cost varied directly with the number of computer hours logged and number of client transactions, respectively. Consulting clients served totaled 35% of the total client base, consumed 30% of the firm's computer hours, and accounted for 20% of the total client transactions.

If Crow and Krause switched to a new activity-based costing system, the amount of administrative cost chargeable to consulting services would:

Multiple Choice

decrease by $40,000.

increase by $40,000.

decrease by $71,500.

change by an amount other than those listed.

change, but the amount cannot be determined based on the information presented.