Li and Wu is an 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 pounds, 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. Using traditional product costing as proposed by the tax partners, compute the total overhead cost assigned to both services of Li and Wu. Cost Drivers Activity Cost Pools Estimated Overhead Estimated Use of Cost Drivers Estimated Use of Cost Drivers per Service Audit Tax $216,000 1,800,000 1,100,000 700,000 Employee training Direct labor pounds 76,200 2,500 800 1,700 Typing and secretarial Number of reports/forms Computing 1204,000 60,000 Number of minutes 27,000 33,000 Facility rental 142,500 40 22 18 Number of employees Travel 81,300 Direct 56,000 25,300 Per expense reports 720,000