Lewis and Stark is a publicaccounting 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 Typing and secretarial Computing Facility rental Travel Cost Drivers Direct labor dollars Number of reports/forms Number of minutes Number of employees Per expense reports Estimated Overhead $214,200 76,000 195,600 147,000 81,200 $714,000 Estimated Use of Cost Drivers $1,785,000 2.500 60,000 40 Direct Audit $1,125,000 800 27,000 22 56,000 Tax $660,000 1,700 33,000 18 25,300 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 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, eg. 12.25) Activity Estimated Expected Use of Activity-Bases Cost Pools Overhead Cost Drivers per Activity Overhead Rate Employee $ Direct labor training dollars Typing and secretarial Reports/forms $ Computing Minutes $ Facility rental Employees $ Travel Direct Direct $ e Textbook and Media Prepare a schedule assigning each activity's overhead cost pool to each service based on the use of the cost drivers. (Round overhead rotes to 2 decimal places, 6.8. 12.25 and cost assigned to O decimal places, eg: 2,500.) Estimated Use of Cost Drivers Audit Activity-Based Overhead Rates Cost Assigned $ $ Activity Cost Pool Employee training Typing and secretariat Computing Facility rental $ $ Direct Travel Overhead costs assigned $ e Textbook and Media 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, es. 12.25 and cost assigned to decimal places, e.g. 2,500.) Tax Estimated Use of Activity-Based Cost Assigned Cost Drivers Overhead Rates Cost Assigned $ $ $ $ $ $ $ Direct $ $ eTextbook and Media