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 Cost Drivers Audit Tax $1,147,000 Activity Cost Pools Employee training Typing and secretarial Computing Facility rental Travel 800 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 $213,900 76,300 192,600 149,000 81,200 $713,000 27,000 22 40 18 Direct 56,000 25,300 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 A 254200 e Textbook and Media Attempts: 1 of 5 used Your answer is correct. 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 1782500 dollars $ 213900 $ .12 76300 2500 Reports/forms 30.52 Computing 192600 60000 Minutes 3.21 Facility rental 149000 40 Employees $ 3725 Travel 81200 Direct Direct $ 713000 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 O decimal places, e.g. 2,500.) Estimated Use of Cost Drivers Audit Activity-Based Overhead Rates Activity Cost Pool Cost Assigned Employee training $ $ Typing and secretarial $ Computing $ Facility rental $ Travel Direct Overhead costs assigned $ Tax Estimated Use of Cost Drivers Activity-Based Overhead Rates Cost Assigned $ $ $ $ $ $ Direct $