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Grady and Associates performs a variety of activities related to information systems and e-commerce consulting in Toronto, Canada. The firm, which bills $156 per hour for services performed, is in a very tight local labor market and is having difficulty finding quality help for its overworked professional staff. The cost per hour for professional staff time is $66. Selected information follows.

• Billable hours to clients for the year totaled 7,600, consisting of information systems services, 4,560; e-commerce consulting, 3,040.
• Administrative cost of $405,760 was (and continues to be) allocated to both services based on billable hours. These costs consist of staff support, $217,560; in-house computing, $153,000; and miscellaneous office charges, $35,200.

A recent analysis of staff support costs found a correlation with the number of clients served. In-house computing and miscellaneous office charges varied directly with the number of computer hours logged and number of client transactions, respectively. A tabulation revealed the following data:

	Information Systems Services				E-Commerce Consulting				Total
Number of clients		280				100				380
Number of computer hours		3,460				2,260				5,720
Number of client transactions		640				800				1,440

Required:

3. Assume that the firm uses activity-based costing. Determine the profitability of the firms e-commerce and information systems activities, expressing your answer both in dollars and as a percentage of activity revenue.

Total Billings Income Profitability Department Information systems services E-commerce consulting

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