1. Port Accounting performs two types of services, Audit and Tax. Ports overhead costs consist of computer support, $400,000; and legal support, $200,000. Information on the two services is:

Audit Tax

Direct labor cost $50,000 $100,000

CPU minutes 40,000 10,000

Legal hours used 200 800

Instructions

Perform the following analyses for these two types of services:

1. allocate total overhead costs to the two services, using direct labor cost as the allocation basis

b. allocate total overhead costs to the two services, using activity-based costing. Computer support overhead costs are allocated based on CPU minutes, Legal Support overhead costs are allocated based on Legal hours used