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 Overhead Estimated Use of Cost Drivers Audit Tax $1,147,000 Activity Cost Pools Employee training Typing and secretarial Computing Facility rental Travel 800 Cost Drivers Direct labor dollars Number of reports/forms Number of minutes Number of employees Per expense reports $1,782,500 2,500 60,000 $635,500 1,700 33,000 27,000 $213,900 76,300 192,600 149,000 81,200 $713,000 40 22 18 Direct 56,000 25,300 (a) Your answer is correct. 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 $ 458800 $ 254200 e Textbook and Media Using activity-based costing, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver). (Round overhead rates to 2 decimal places, e.g. 12.25.) Estimated Overhead Activity-Bas Overhead Ra Activity Cost Pools Employee training Typing and secretarial Expected Use of Cost Drivers per Activity Direct labor dollars $ $ $ Reports/forms $ Computing Minutes $ Facility rental Employees Travel Direct Direct $ Activity-Based Overhead Rates to per DL dollar $ per report/form $ per minute $ per employee Direct