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:

ProfessionalBilling Rate per Hour

Myron Wolfson....................................$800

Naomi Ku.............................................144

John Anderson........................................96

WG has just prepared the May 2015 bills for two clients. The hours of professional time spent on each client are as follows:

Hours per Client

Professional Winnipeg DominionTokyo Enterprises

Wolfson....................................15.................................2

Ku............................................3.................................8

Anderson..................................22................................30

Total.......................................40.................................40

Required

1. What amounts did WG bill to Winnipeg Dominion and Tokyo Enterprises for May 2015?

2. Suppose support services were billed at $60 per professional labour-hour (instead of 30% of professional labour costs). How would this change affect the amounts WG billed to the two clients for May 2015? Comment on the differences between the amounts billed in requirements 1 and 2.

3. How would you determine whether professional labour costs or professional labour-hours are the more appropriate allocation base for WG's support services?