Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I need help figuring out the unanswered portions of the problem please Problem 18-5A Polk and Stoneman is a public accounting firm that offers two
I need help figuring out the unanswered portions of the problem please
Problem 18-5A Polk and Stoneman 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. Expected Use of C Activity Cost Pools Cost Drivers Employee training Typing and secretarial Computing Facility rental Travel Direct labor dollars Number of reports/forms Number of minutes Number of employees Per expense reports Estimated Overhead Expected Use of Cost Drivers $195,800 76,070 214,430 144,400 81,300 $1,780,000 2,500 60,000 40 Direct $712,000 Don't show me this message again for the assignment Using traditional product costing as proposed by the tax partners, compute the total overhead cost assigned to both services (audit and tax) of Polk and Stoneman. Audit Tax $ $ Total overhead cost assigned Don't show me this message again for the assignment (1) Using activity-based costing, prepare a schedule showing the computations of the activitybased overhead rates. (Round overhead rate to 2 decimal places, e.g. $12.25.) Activity Cost Pools Estimated Overhead Expected Use of Cost Drivers per Activity $ Employee training 195,800 Activity-Based Overhead Rates $ 1,780,000 Direct labor dollars per DL dollar $ Typing and secretarial 76,070 2,500 Reports/forms per report/form $1,066,000 $ Computing 214,430 Minutes 60,000 per minute $ Facility rental 144,400 Travel per employee Employees 40 Direct 81,300 Direct $ 712,000 (2) Prepare a schedule assigning each activity's overhead cost pool to each service based on the use of the cost drivers. (Round overhead rate to 2 decimal places, e.g. $12.25 and cost assigned to 0 decimal places, e.g. $2,500. ) Audit Activity Cost Pool Expected Use of Cost Drivers $ Employee training Tax ActivityBased Overhead Rates Expected Use of Cost Drivers Cost Assigned $ $ $ 1,066,000 800 $ 25,000 35,000 $ 22 18 $ Travel Overhea d costs assigned $ Direct 56,000 $ 1,700 $ Facility rental $ $ $ Computing Cost Assigned 714,000 $ Typing and secretarial ActivityBased Overhead Rates Direct 56,000 25,300 $ Don't show me this message again for the assignment 25,300 $Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started