Germinal et Associés provides tax advice to multinational firms. Germinal charges clients for (a) direct professional time (at an hourly rate) and (b) support services (at 30% of the direct professional costs billed). The three professionals in Germinal and their rates per hour are:
Professional Billing rate per hour
Thérèse Raquin.................... ‚¬500
Jeanne Rozerot..................... 120
Claude Bernard...................... 80
Germinal has just prepared the May 2008 bills for two clients. The hours spent on each client are as follows:

Required
1. What amounts did Germinal bill to Fortune Plassans and Au Bonheur des Dames for
May 2008?
2. Suppose support services were billed at ‚¬50 per labour-hour (instead of 30% of labour costs). How would this change affect the amounts Germinal billed to the two clients for May 2008? Comment on the differences between the amounts billed in requirements 1 and 2.
3. How would you determine whether labour costs or labour-hours is the more appropriate allocation base for Germinal's support services?

Transcribed Image Text:

Hours per client Fortune Plassans Au Bonheur des Dames Professional 15 3 Raquin Rozerot Bernard Total 30 40 40