Wendy Chen established Windy City Coaching (WCC) to provide teen counseling and executive coaching services...
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Accounting
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
Executive Coaching
Total
Revenue
$
66,000
$
147,000
$
213,000
Expenses:
Administrative support
44,000
Transportation, etc
35,360
Equipment
16,800
Profit
$
116,840
WCC has kept good records of the following data for cost allocation purposes:
Activity Level
Activity
Cost Driver
Teen Counseling
Executive Coaching
Providing administrative support
Number of clients
6
5
Traveling
Number of visits
90
170
Using equipment
Computer hours
700
700
Required:
a. Complete the income statement using activity-based costing and WCCs three cost drivers. (Do not round intermediate calculations.)
b. Recompute the income statement using direct labor-hours as the only allocation base (220 hours for teen counseling; 490 hours for executive coaching). (Do not round intermediate calculations.)
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