The Wolfson Group (WG) provides tax advice to multinational firms. WG charges clients for (a) direct professional time (at an hourly rate) and (b) support services (at 30% of the direct professional costs billed). The three professionals in WG and their rates per professional hour are as follows:

Professional

Billing Rate per Hour

Montel Wolfson

$480

Alice Batemen

200

John Anderson

110

WG has just prepared the May 2017 bills for two clients. The hours of professional time spent on each client are as follows:

Professional Springfield Dominion London Enterprises

Wolfson 23 3

Batemen 5 12

Anderson 32 45

Total

60 60

.

What amounts did WG bill to Springfield Dominion and London 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?