60.1K

Verified Solution

Link Copied!

Ch17 Q12 b1 Show work please thanks

Lewis and Stark is a public accounting firm that offers two primary services auditing and tax return preparation. A controversy has developed between the partners of the two service lines as to whois contributing the greater amount to the bottom line. The area of contention is the assignment of overhead. The tax partners argue for assigning overhead on the basis of 4035 of direct labor dollars, while the audit partners argue for implementing activity-based costing. The partners agree to use next year's budgeted data for purposes of analysis and comparison. The following overhead data are collected to develop the comparison Estimated Use of Cost Drivers per Service Tax Activity Cost Pools Employee training Typing and secretarial Comiting Facility rental Travel Cost Drivers Direct labor dollars Number of reports/forms Number of minutes Number of employees Per expense reports Estimated Overhead $221100 76.900 213.000 145.000 81.000 $737.000 Estimated Use of Cost Drivers $1.842.500 2.500 60,000 40 Audit $1140.000 800 27.000 22 56.000 5702 500 1700 33.000 18 25.300 Direct Using activity based costing, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver) (Round overhead rates to 2 decimal places, eg. 12.25.) Estimated Overhead Activity-Based Overhead Rate Activity Cost Pools Employee training Typing and secretarial Expected Use of Cost Drivers per Activity Direct labor dollars $ $ $ Reports/forms Minutes 5 Computing Facility rental Employees $ Direct Direct Direct Travel $ Activity-Based Overhead Rates $ per DL dollar $ per report/form per minute $ employee Direct a) Your answer is correct Msing traditional product costing as proposed by the tax partners, compute the total overhead cost assigned to both services audit and tax) of Lewis and Stark. Audit Tax Total overhead cost assigned $ 456000 $ 281000

Answer & Explanation Solved by verified expert

See Answer