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 Use of Estimated Cost Activity Cost Pools Cost Drivers Overhead Drivers Audit Tax Employee training Direct labor dallars $ 201,025 $1,827,500 $1,192,000 $635,500 Typing and secretarial Number of reports/forms 76,300 2,500 800 1,700 Computing Number of minutes 227,400 60,000 27,000 33,000 Facility rental Number of employees 145,000 40 22 18 Travel Per expense reports 81,275 Direct 25,300 $731,000 56,000 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. Audit Tax Total overhead cost assigned $ 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 Expected Use of Activity-Based Activity Cost Pools Overhead Cost Drivers per Activity Overhead Rates Employee training Direct labor dollars $ $ $ per DL dallar Typing and secretarial Reports/forms $ per report/form Computing Minutes $ per minute Facility rental Employees $ per employee Travel 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 rates to 2 decimal Audit Estimated Use of Activity-Based Cost Drivers Overhead Rates Cost Assigned Tax Estimated Use of Activity-Based Cost Drivers Overhead Rates Cost Assigned Activity Cost Pool Employee training $ $ Typing and secretarial $ $ Computing $ $ Facility rental m $ Travel Direct Direct Overhead costs assigned $