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Current Attempt in Progress Lewis and Stark is a public accounting firm that offers two primary services, auditing and tax-return preparation A controversy has developed
Current Attempt in Progress 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 who is 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 40% 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 Estimated Use Estimated of Activity Cost Pools Cost Drivers Overhead Cost Drivers Audit Employee training Direct labor dollars $202,675 $1.842.500 $1,161,000 $681.500 Typing and secretarial Number of reports/forms 76,800 2.500 800 1.700 Computing Number of minutes 232.200 60,000 27.000 33,000 Facility rental Number of employees 144,000 40 22 18 Travel Per expense reports 81,325 Direct 56,000 23.900 $737,000 2 X Your answer is incorrect Prepare a schedule assigning each activity's overhead cost pool to each service based on the use of the cost drivers. (Round overhead rates to 2 decimal places, e.g. 12.25 and cost assigned to 0 decimal places, c.g. 2,500.) Audit Estimated Use of Activity-Based Activity Cost Pool Cost Drivers Overhead Rates Cost Assigned Employee training Typing and secretarial Computing $ $ $ Facility rental Direct Travel $ Overhead costs assigned e Textbook and Media Attempts:0 of 1 used Submit Answer Sove for Later
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