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Please complete the red sections. No need to show work. Problem 17-5A (Part Level Submission) Polk and Stoneman is a public accounting firm that offers
Please complete the red sections. No need to show work.
Problem 17-5A (Part Level Submission) Polk and Stoneman is a public accounting firm that offers two primary services, auditing and tax-return preparation. A controversy has developed between the partners 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 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 purposes of analysis and comparison. The following overhead data are collected to develop the comparison Expected Use of Cost Drivers per Service Estimated Overhead $237,250 76,550 187,600 147,300 81,300 $730,000 Expected Use of Cost Drivers Cost Drivers Activity Cost Pools Employee training Typing and secretarial Computing Facility rental Travel Audit Tax Direct labor dollars Number of reports/forms Number of minutes Number of employees Per expense reports $1,825,000 $1,088,000 $737,000 1,700 35,000 18 25,300 2,500 60,000 800 25,000 Direct 56,000 (a) Your answer is correct. Using traditional product costing as proposed by the tax partners, compute the total overhead cost assigned to both services (audit and tax) of Polk and Stoneman. ax Total overhead cost assigned 435200 294800Step by Step Solution
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