Monson& Company is an architectural firm specializing inhome remodeling for private clients and new office buildings forcorporate clients. Monson charges customers at a billing rate equalto 128?%

of the? client's total job cost. A? client's total job cost is acombination of?(1) professional time spent on the client $64 perhour cost of employing each? professional) and? (2) operatingoverhead allocated to the? client's job. Monson allocates operatingoverhead to jobs based on professional hours spent on the job.Monson estimates its five professionals will incur a total of?10,000 professional hours working on client jobs during theyear.

All operating costs other than professional salaries? (travelreimbursements, copy? costs, secretarial? salaries, office? lease,and so? forth) can be assigned to the three activities. Totalactivity? costs, cost? drivers, and total usage of those costdrivers are estimated as? follows:

	Total		Total Usage		Total Usage
	Activity		by Corporate		by Private
Activity	Cost	Cost Driver	Clients		Clients
Transporation to clients. . . . .	$6,000	Round-trip mileage to clients. .	2,000	miles	13,000	miles
Blueprint copying. . . . . . . .	34,000	Number of copies. . . . . . . . . . . . .	350	copies	650	copies
Office support. . . . . . . . . . . . . .	180,000	Secretarial time. . . . . . . . . . .	2,400	secretarial	2,600	secretarial
				hours		hours
Total operating overhead. .	$220,000

AnnikaLaughlin hired Monson to design her kitchen remodeling. Atotal of 2020 professional hours were incurred on this job. In?addition, Laughlin?'s remodeling job required one of theprofessionals to travel back and forth to her house for a total of160 miles. The blueprints had to be copied four times becauseLaughlin changed the plans several times. In? addition, 19 hours ofsecretarial time were used lining up the subcontractors for thejob.

Requirements

1.	Calculate the current indirect cost allocation rate perprofessional hour.
2.	Calculate the total amount that would be billed to Laughlingiven the current costing structure.
3.	Calculate the activity cost allocation rates that could be usedto allocate operating overhead costs to client jobs.
4.	Calculate the amount that would be billed to Laughlin using ABCcosting.
5.	Which type of billing system is more fair to? clients?Explain.