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Unformatted text preview: Student_______________________ Homework Assignment Number 2 (Ch 9) 1. Terri Martin Nerdmeister, CPA provides bookkeeping and tax services to her clients. She charges a fee of $60 per hour for bookkeeping and $90 per hour for tax services. Martin estimates the following costs for the upcoming year: Operating profits declined last year and Ms. Martin has decided to use activity-based costing (ABC) procedures to evaluate her hourly fees. She gathered the following information from last year's records: A. What is the total cost allocated to the bookkeeping services using activity-based costing? B. Martin wants her hourly fees for the tax services to be 160% of their activity-based costs. What is the fee per hour for tax services in the upcoming year? C. Martin cannot change the hourly fee for the bookkeeping services because of the number of competing firms in the area. If Martin wants to earn $60,000 pre-tax in the upcoming year, how much will she charge per hour for tax services? D. A major client has requested bookkeeping service. However, Martin is already billing 100% of her capacity (i.e., 2,000 hours per year) and would need to shift 100 hours from her tax services to meet this client's request. What is the minimum fee per hour that Martin could charge this client for bookkeeping services and be no worse off than last year? bookkeeping services and be no worse off than last year?...
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- Spring '08