ABC is a medium sized accounting firm located in Little Rock, Arkansas. They provide two types of services, audit and tax. ABC has two types of costs - direct labor, and overhead, which includes everything other than direct labor. Direct labor is traced directly from time sheets to specific audit jobs and tax returns. Overhead costs consists of facility costs (rent on their office space, furnishings, utilities, insurance, etc.) and indirect labor (clerical workers and assistants who do not have direct contact with clients). Facilities costs make up approximately 70% of total overhead costs, with indirect labor making up the rest. Overhead costs at ABC are allocated first to the audit and tax departments based on the actual number of direct labor hours in each department during the year, using a pre-determined (normal) overhead rate. ABC does NOT pro-rate estimation errors. Within each department, allocations are all made using actual costing, and using a weighted average cost flow assumption. The audit department allocates overhead to audit jobs based on customer revenue, while the tax department allocates overhead to tax returns based on the number of tax returns completed. Tax Department: During the current year, the tax department budgeted for 50,000 hours at an average of $60 per hour in direct labor. The budget called for 900 returns, with a total revenue of $7,200,000. The tax department actually had 52,000 direct labor hours, at a total cost of $3,120,000. During the year, the tax department completed 1000 returns, with an actual total revenue of $7,800,000. QuestionA colleague has pointed out that although we allocate tax department overhead by number of returns, it is probably not correct that every return requires the exactly the same amount of overhead resources. What are three factors that ABC would want to consider before deciding whether or not to increase the accuracy of their cost system (by, for example, finding a better driver)? Be as specific as possible, and be clear how the factor would impact the decision to increase the accuracy or not. It is not necessary that the needed information be included in the problem (one or two sentences each). Factor 1: factor 2: factor 3