ABC versus traditional costing. 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...

ABC versus traditional costing. 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:

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 allocate expenses?