Danny Whelan provides consulting and tax preparation services to his clients. He charges a fee of $100 per hour for each service. His revenues and expenses for the year are shown in the following income statement:

Danny has kept records of the following data for cost allocation purposes:

a. Complete the income statement using these three cost drivers.
b. Recompute the income statements using hours billed as the only allocation base.
c. How might Danny's decisions be altered if he were to use only hours billed to allocateexpenses?

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Tax Consultingg Total Revenue Expenses: $80,000 $120,000 $200,000 Filing, scheduling, and data entry Supplies Computer costs 40,000 36,000 20.000 $104,000 -- Profit Activity Level Expenses Cost Driver Number of Clients Number of Hours Billed Computer Hours Tax Preparation Consulting Fili ng, scheduling, and data entry Supplies Computer costs 72 800 1,000 48 1,200 600