Nach can result osmons P5.41A (LO 1. 2. 3. 4) Hy and van Lamsweerde 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 regarding who is contributing the greater amount to the honom line. The area of contention is the assignment of overhead. The tax partners argue for assigning overhead on the basis of 40% of direct labour dolars, while the Budi partners argue for implementing activity-hased coing. The partners agree to use next year's budgeted data for analysis and comparison The following overhead data are collected Assign overhead costs to services using traditional costing and ABC calculate overhead rates and wat costs, compare results. Estimated Use of Cost Drivers per Service Estimated Use Estimated of Cost Overhead Drivers Audit Tax $216,000 $1,800,000 $1,050.000 $750.000 76.200 2,500 800 1.700 Activity Cost Pools Cost Drivers Employee Direct labour training dollars Typing and Number of Secretarial reports and forms Computing Number minutes Facility Number of rental employees 204,000 1000 35.000 142,500 22 18 Travel Per expense 81.300 Direct 56.000 25.300 reports $720,000 Instructions a. Using traditional product costing as proposed by the taxpartners calculate the total overhead cost assigned to both services (audit and ta) of Hy and van Lamsweerde. b. 1. Using activity-based costing prepare a schedule showing the calculations of the activity based overhand rates per costrver) 2. Prepare a schedule assigning each activity's overhead cost pool to each service based on the use of the cost drivers (2) Cost assigned--Tax S350,241 C. Classily each of the activities as a value-added activity or a non-vale added activity d. Comment on the comparative overhead cast for the two services under both traditional costing and ABC. Ditterence-Audit 550,241