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Wendy Chen established Windy City Coaching (WCC) to provide teencounseling and executive coaching services to its clients. WCCcharges a $300 fee per hour for each service. The revenues andcosts for the year are shown in the following income statement:WINDY CITY COACHINGIncome StatementTeen CounselingExecutive Coaching    TotalRevenue$66,000$135,000$201,000Expenses:Administrative support40,000Transportation, etc.36,000Equipment20,000Profit$105,000WCC has kept good records of the following data for costallocation purposes:Activity LevelActivityCost DriverTeen CounselingExecutive CoachingProviding administrative supportNumber of clients    6    4TravelingNumber of visits100150Using equipmentComputer hours900700RequiredComplete the income statement using activity-based costing andWCC’s three cost drivers.Recompute the income statement using direct labor-hours as theonly allocation base (220 hours for teen counseling; 450 hours forexecutive coaching).How might WCC’s decisions regarding pricing or dropping aservice be altered if Wendy were to allocate all overhead costsusing direct labor-hours?Under what circumstances would the labor-based allocation andactivity-based costing (using Wendy’s three cost drivers) result insimilar profit results?A local nonprofit charity is looking for worthy causes tosupport through financial grants. A primary criterion for supportis financial need. Wendy is thinking of applying for support forthe teen counseling program. Which allocation method would give herthe best chance of winning a grant? Would it be ethical for Wendyto report the income using this method in her application?