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Question 1:

Hobart, Evans, and Nix is a small law firm that contains 10 partners and 12 support persons. The firm employs a job-order costing system to accumulate costs chargeable to each client, and it is organized into two departments - the Research and Documents Department and the Litigation Department. The firm uses predetermined overhead rates to charge the costs of these departments to its clients. At the beginning of the year, the firm's management made the following estimates for the year:

	Department
	Research and Documents	Litigation
Research-hours	17,000
Direct attorney-hours	6,400	12,800
Legal forms and supplies	11,400	3,600
Direct lawyer cost	320,600	641,200
Departmental overhead cost	680,000	192,360

The predetermined overhead rate in the Research and Documents Department is based on research-hours, and the rate in the Litigation Department is based on direct lawyer cost.

The costs charged to each client are made up of three elements: legal forms and supplies used, direct lawyer costs incurred, and an applied amount of overhead from each department in which work is performed on the case.

Case 418-3 was initiated on February 16 and completed on May 23. During this period, the following costs and time were recorded on the case:

	Department
	Research and Documents	Litigation
Research-hours	32
Direct attorney-hours	9	139
Legal forms and supplies	50	50
Direct lawyer cost	240	3,600

Required:
1.	Compute the predetermined overhead rate used during the year in the Research and Documents Department. (Round your answer to 2 decimal places.)
	Compute the predetermined overhead rate used during the year in the Litigation Department. (Round your answer to 2 decimal places.)

2.	Compute the total overhead cost applied to case 418-3. (Round your answer to the nearest whole number.)

3.	What would be the total cost charged to case 418-3? Show computations by department and in total for the case. (Round your answer(s) to the nearest whole number.)

4.	At the end of the year, the firm's records revealed the following actual cost and operating data for all cases handled during the year:

		Department
		Research and Documents	Litigation
	Research-hours	18,400
	Direct attorney-hours	5,600	10,700
	Legal forms and supplies	13,600	4,400
	Direct lawyer cost	285,000	534,300
	Departmental overhead cost	704,300	168,300

	Determine the amount of under- or overapplied overhead cost in each department for the year. (Round your answer(s) to the nearest whole number. Enter your answers as a positive values.)

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