Question

Wendy Chen established Windy City Coaching (WCC) to provide teen counseling and executive coaching services to its clients. WCC charges a $300 fee per hour for each service. The revenues and costs for the year are shown in the following Income statement. WINDY CITY COACHING Income statement Teen Counseling $60,000 Executive Coaching $129, eee Total $189, eee Revenue Expenses: Administrative support Transportation, etc Equipment Profit 43,eee 37,440 18,200 $ 90,360 WCC has kept good records of the following data for cost allocation purposes. Activity Level Teen Executive Counseling Coaching Activity Providing administrative support Traveling Using equipment Cost Driver Number of clients Number of visits Computer hours 12e 140 see 600 Required: a. Complete the Income statement using activity-based costing and WCC's three cost drivers. b. Recompute the income statement using direct labor-hours as the only allocation base 200 hours for teen counseling: 430 hours for executive coaching). Complete this question by entering your answers in the tabs below. Required A Required B Complete the income statement using activity-based costing and WCC's three cost drivers. (Do not round intermediate calculations.) Account Teen Counseling $ 60,000 Executive Coaching $ 129,000 Total 189,000 $ Revenue Expenses: Administrative support Transportation, etc Equipment Profit 43,000 37,440 18,200 90,360 $ Required B >

Answer 1

Required A :
	Activity level
Activity	Teen counseling	Executive coaching	Total
Providing administrative support	7	3	10
Traveling	120	140	260
Using equipment	800	600	1400
Account	Teen counseling	Executive coaching	Total
Revenue	60000	129000	189000
Expenses:
Administrative support	30100 [ 43000*7/10 ]	12900 [ 43000*3/10 ]	43000
Transportation, etc.	17280 [ 37440*120/260 ]	20160 [ 37440*140/260 ]	37440
Equipment	10400 [ 18200*800/1400 ]	7800 [ 18200*600/1400 ]	18200
Profit	2220	88140	90360

Required B :
Total direct labor hours = 200 + 430	630
Total expenses = 43000 + 37440 + 18200	98640

Account	Teen counseling	Executive coaching	Total
Revenue	60000	129000	189000
Expenses	31314 [ 98640*200/630 ]	67326 [ 98640*430/630 ]	98640
Profit	28686	61674	90360