Let’s consider costing for a service organization. Assume you are a consultant for a law firm....

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Accounting

Let’s consider costing for a service organization. Assume youare a consultant for a law firm. The firm currently has notraditional cost accounting system in place. A partner has taken acourse in management accounting and wants to understand traditionaland activity based costing. Explain to the partner how atraditional overhead rate is determined and what would be a gooddenominator activity to use as the base. Also explain what is meantby activity-based costing and how it would might lead to betterdecisions for the firm.

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Under traditional costing the overhead allocated using one single predetermined rate for all the activities Predetermined overhead is the rate which is used to apply overhead to services and is usually completed and calculated at the beginning of the year by dividing the overhead cost with the allocation based In manufacturing industries See Answer

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