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Lewis and Stark is a public accounting firm that offers two primary services, auditing and tax - return preparation. A controversy has developed between the
Lewis and Stark is a public accounting firm that offers two primary services, auditing and taxreturn 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 of direct labor dollars, while the audit partners argue for implementing activitybased 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.
tabletableUse of CostDrivers per ServiceActivity Cost Pools,Cost Drivers,Estimated Overhead,tableEstimated Use ofCost DriversAudit,Tax
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