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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 of Cost Drivers Activity Cost Pools Cost Drivers Estimated Overhead Audit Tax Employee training Direct labor dollars $214,800 $1,790,000 $1,130,000 $660,000 76,000 Number of reports/forms 2.500 800 1.700 Typing and secretarial 202,800 Number of minutes 27,000 33,000 Computing 141.000 Number of employees 22 18 Facility rental 81,400 Per expense reports 56,000 25,300 Travel $716,000 60,000 40 Direct (a) Using 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 $ $ eTextbook and Media Attempts: 0 of 3 used Submit Answer Save for Later