Wendy Chen established Windy City Coaching (WCC) to provide teen counseling and

Question

Wendy Chen established Windy City Coaching (WCC) to provide teen counseling and executive coaching services to its clients. WCC charges a $300 fee per hour for each service. The revenues and costs for the year are shown in the following income statement:

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

WINDY CITY COACHING Income Statement Teen
Counseling Executive
Coaching Total Revenue $ 66,000 $ 135,000 $ 201,000 Expenses: Administrative support 40,000 Transportation, etc 36,000 Equipment 20,000 Profit $ 105,000

Explanation / Answer

I am providing breakup of the expenses for each teen and executive counselling.

Admin support:

teen =6/10=60%

=60%*40,000=24,000

executive=40%*40,000=16,000

travelling:

teen =100/(100+150)=40%

=40%*36,000=14,400

executive=60%*36,000=21,600

using equipment:

teen =900/(900+700)=56.25%

=56.25%%*20,000=11,250

executive=43.75%*20,000=8.750

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