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 Activity Cost Pools Employee training Cost Drivers Estimated Overhead Estimated Use of Cost Drivers Audit Tax Direct labor dollars $220,500 $1,837,500 $1,153,000 $684,500 Typing and secretarial Number of reports/forms 76,300 2,500 800 1,700 Computing Number of minutes 216,000 60,000 27,000 33,000 Facility rental Number of employees 141,000 40 22 18 Travel Per expense reports 81,200 Direct 56,000 25,300 $735,000 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. Total overhead cost assigned Audit Tax Using activity-based costing, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver). (Round overhead rate to 2 decimal places, e.g. 12.25.) Expected Use of Activity Cost Pools Employee training Estimated Overhead Cost Drivers per Activity Direct labor dollars Activity-Based Overhead Rates per DL dollar Typing and secretarial Computing Facility rental Travel Reports/forms Minutes per report/form per minute Employees per employee Direct Direct 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.) Activity Cost Pool Expected Use of Cost Drivers Audit Activity-Based Overhead Rates Cost Assigned Expected Use of Cost Drivers Tax Activity-Based Overhead Rates Cost Assigned Employee training Typing and secretarial Computing Facility rental Travel Overhead costs assigned Direct Direct