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. Activity Cost Pools Cost Drivers Estimated Overhead Employee training Direct labor dollars $201.025 Typing and secretarial Number of reports/forms 76.300 Computing Number of minutes 227.400 Facility rental Number of employees 145,000 Travel Per expense reports 81,275 $731.000 Estimated Use of Cost Drivers per Service Estimated Use of Cost Drivers Audit Tax $1,827,500 $1,192,000 $635,500 2.500 800 1.700 60.000 27,000 33.000 40 22 18 Direct 56.000 25.300 Your answer is 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 $ $ e Textbook and Media Rectangular Ship Your answer is partially 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 Expected Use of Cost Drivers per Activity Activity-Based Overhead Rates Activity Cost Pools Employee training $ 201025 1827500 Direct labor dollars $ per DL dollar Typing and secretarial 76300 2500 Reports/forms $ per report/form Computing 227400 60000 Minutes $ per minute Facility rental 145000 40 Employees $ per employee Travel 81275 Direct Direct $ e Textbook and Media X Your answer is incorrect. 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 0 decimal places, eg. 2,500.) Audit Tax Estimated Use of Cost Drivers Activity-Based Overhead Rates Estimated Use of Cost Drivers Activity-Based Overhead Rates Activity Cost Pool Cost Assigned Cost Assigned Employee training $ $ $ $ $ Typing and secretarial $ $ Computing $ $ Facility rental $ $ Travel Direct Direct Overhead costs assigned $ $ e Textbook and Media