T3 Technology Services provides consulting services to government and corporate clients. Because of security concerns, the firm has a separate staff servicing the two kinds of clients. However, one information systems group services the two groups of consultants. Likewise, a single administrative department provides all needed secretarial and administrative support.

T3 wishes to base its billing rates on the cost per hour of consulting provided by its staff. Assume that each person in the Government and Corporate consulting group provides 1,500 hours of billable support per year. The following table provides relevant data.

T³ Technologies allocates the costs of the IS Department using the hours of support provided and the AS Department costs by the head count in the user departments.

Required:
Determine the costs per hour of consulting provided by the Government and Corporate groups after using the direct method to allocate support department costs to the Government and Corporate groups.

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IS AS Government Coporate $500,000 $300,000 $2,400,000 $3,240,000 Traced costs Service consumption patternServices consumed by Services provided by AS (Persons 5 IS AS Government Corporate IS (hours) 4,000 hours 2,000 hours 4,000 hours 20 25