Hy and van Lamsweerde 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 regarding 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 labour dollars, while the audit partners argue for implementing activity-based costing. The partners agree to use next years budgeted data for analysis and comparison. The following overhead data are collected:

													Expected Use of Cost Drivers per Service
Activity Cost Pools		Cost Drivers			Estimated Overhead				Expected Use of Cost Drivers				Audit		Tax
Employee training		Direct labour dollars				$224,638				$1,871,983			$927,000		$944,983
Typing and secretarial		Number of reports and forms				76,545				2,700			600		2,100
Computing		Number of minutes				211,060				61,000			25,000		36,000
Facility rental		Number of employees				154,350				45			25		20
Travel		Per expense reports				82,200				Direct			56,300		25,900
						748,793

(a)

Using traditional product costing as proposed by the tax partners, calculate the total overhead cost assigned to both services (audit and tax) of Hy and van Lamsweerde. (Round answers to 0 decimal places, e.g. 1525.)

Overhead assigned to audit:		$
Overhead assigned to tax:		$

(b)

1. Using activity-based costing, prepare a schedule showing the calculations of the activity-based overhead rates (per cost driver). (Round answers to 2 decimal places, e.g. 15.25.)

		Activity-based overhead rates
Employee training		$	per DL dollar
Secretarial		$	per report/form
Computing		$	per minute
Facility rental		$	per employee
Travel		$

2. Prepare a schedule assigning each activitys overhead cost pool to each service based on the use of the cost drivers. (Round answers to 0 decimal places, e.g. 1525.)

		Audit		Tax
Training		$		$
Secretarial
Computing
Rent
Travel (Direct)
Total overhead assigned		$		$