The Winter Group (WG) provides tax advice to multinational WG has just prepared the May 2017 bills for two clients. The firms. WG charges clients for (a) direct professional time (at hours of professional time spent on each client are as an hourly rate) and (b) support services (at 30% of the direct follows: professional costs billed). The three professionals in WG and 2(Click the icon to view the hours by client.) their rates per professional hour are as follows: (Click the icon to view the hourly rates.) Read the requirements Requirement 1. What amounts did WG bill to South Beach Dominion and Madrid Enterprises for May 2017? Determine the formula needed to calculate the total cost per professional for each client when WG allocates support costs at 30% of direct professional costs. Direct professional labor + ( Direct professional labor X Support allocation rate Cost per professional Complete the table below to determine the amounts that WG billed to South Beach Dominion and Madrid Enterprises for May 2017. Begin with South Beach Dominion. South Beach Dominion Direct Amount Madrid Enterprises Direct Amount Professional Support Billed to Costs Costs Client Professional Support Billed to Costs Costs Client Matthew Winter Alberta Boutin Jerome Abott Total Requirement 2. Suppose support services were billed at $65 per professional labor-hour (instead of 30% of professional labor costs). How would this change affect the amounts WG billed to the two clients for May 2017? Comment on the differences between the amounts billed in requirements 1 and 2. Determine the formula needed to calculate the total cost per professional for each client when WG allocates support costs at $65 per professional labor-hour. (Abbreviations used: hrs. = hours.) (1) (2) (3) Cost per professional Complete the table below to determine what WG would have billed to South Beach Dominion and Madrid Enterprises for May 2017 if support services were billed at $65 per professional labor-hour (instead of 30% of professional labor costs). Begin with South Beach Dominion. South Beach Dominion Direct Amount Madrid Enterprises Direct Amount Professional Support Billed to Costs Costs Client Billed to Professional Support Costs Costs Client Matthew Winter Alberta Boutin Jerome Abott Total (5) uses a higher proportion of Winter's time, which is (6) costly. This support services charge when allocated on the basis of direct professional labor costs. attracts (7) Requirement 3. How would you determine whether professional labor costs or professional labor-hours is the more appropriate allocation base for WG's support services? In order to determine whether professional labor costs or professional labor-hours is the more appropriate allocation base for support services, WG should (8) 1: Data Table Professional Billing Rate per Hour $ 520 Matthew Winter Alberta Boutin 150 Jerome Abott 80 2: Data Table Hours per Client South Beach Dominion Madrid Enterprises Professional Winter 21 3 Boutin 4 11 Abott 30 41 Total 55 55 3. Requirements 1. What amounts did WG bill to South Beach Dominion and Madrid Enterprises for May 2017? 2. Suppose support services were billed at $65 per professional labor-hour (instead of 30% of professional labor costs). How would this change affect the amounts WG billed to the two clients for May 2017? Comment on the differences between the amounts billed in requirements 1 and 2. 3. How would you determine whether professional labor costs or professional labor-hours is the more appropriate allocation base for WG's support services? O Support cost per hour (1) O O Direct hrs, by professional O Direct professional labor O Support allocation rate O Support cost per hour (2) a Direct hrs. by professional O Direct professional labor O Support allocation rate 3 Support cost per hour Direct hrs. by professional Direct professional labor Support allocation rate (4) Both clients use the same amount of professional labor time. Madrid uses a greater amount of professional labor time than South Beach. South Beach uses a greater amount of professional labor time than Madrid. Madrid Enterprises South Beach Dominion (6) less nore an equal the highest the lowest (8) choose the method of allocation that results in the greater total support service charges to the clients. choose the method of allocation that results in the lower total support service charges to the clients. gather more information by conducting interviews with personnel and analyzing tasks undertaken for certain clients