Terri Martin,CPA provides bookkeeping and tax services to her clients.She charges a fee of $60 per hour for bookkeeping and $90 per hour for tax services.Martin estimates the following costs for the upcoming year: Operating profits declined last year and Ms.Martin has decided to use activity-based costing (ABC)procedures to evaluate her hourly fees.She gathered the following information from last year's records: A major client has requested bookkeeping services.However,Martin is already billing 100% of her capacity (i.e. ,2,000 hours per year)and would need to shift 100 hours from her tax services to meet this client's request.What is the minimum fee per hour that Martin could charge this client for bookkeeping services and be no worse off than last year?

Question

Terri Martin,CPA provides bookkeeping and tax services to her clients.She charges a fee of $60 per hour for bookkeeping and $90 per hour for tax services.Martin estimates the following costs for the upcoming year:  Operating profits declined last year and Ms.Martin has decided to use activity-based costing (ABC)procedures to evaluate her hourly fees.She gathered the following information from last year's records:  A major client has requested bookkeeping services.However,Martin is already billing 100% of her capacity (i.e. ,2,000 hours per year)and would need to shift 100 hours from her tax services to meet this client's request.What is the minimum fee per hour that Martin could charge this client for bookkeeping services and be no worse off than last year?

Quizplus · Accepted Answer

The Answer of Terri Martin,CPA provides bookkeeping and tax services to her clients.She charges a fee of $60 per hour for bookkeeping and $90 per hour for tax services.Martin estimates the following costs for the upcoming year:  Operating profits declined last year and Ms.Martin has decided to use activity-based costing (ABC)procedures to evaluate her hourly fees.She gathered the following information from last year's records:  A major client has requested bookkeeping services.However,Martin is already billing 100% of her capacity (i.e. ,2,000 hours per year)and would need to shift 100 hours from her tax services to meet this client's request.What is the minimum fee per hour that Martin could charge this client for bookkeeping services and be no worse off than last year?

Terri Martin,CPA Provides Bookkeeping and Tax Services to Her Clients