Martin and beasley, an accounting firm, provides consulting and tax planning services. for many years, the firm's total administrative cost (currently $270,000) has been allocated to services on this basis of billable hours to clients. a recent analysis found that 55% of the firm's billable hours to clients resulted from tax planning services, while 45% resulted from consulting services. the firm, contemplating a change to activity-based costing, has identified three components of administrative cost, as follows:

Robert black, regional manager for ford in texas and oklahoma, faced a dilemma. the ford f-150 pickup truck was the best-selling pickup ever, yet ford's headquarters in detroit had decided to introduce a completely redesigned f-150. how could mr. black sell both trucks at the same time? he still had "old" f-150s in stock. in his advertising, mr. black referred to the new f-150s as follows: "not a better f-150. just the only truck good enough to be the next f-150." this statement represents ford's of the new f-150.