Question 11 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 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 labour dollars, while the audit partners argue for implementing activity-based costing. The partners agree to use next year's budgeted data for analysis and comparison. The following overhead data are collected: Estimated Use of Cost Drivers per Service Tax Activity Cost Pools Employee training Typing and secretarial Computing Facility rental Travel Cost Drivers Direct labour dollars Number of reports and forms Number of minutes Number of employees Per expense reports Estimated Overhead $229,704 75,250 213,150 164,976 82,600 $765,680 Estimated Use of Cost Drivers $1,914,200 2,500 60,900 Audit $929,000 600 25,100 28 57,400 $985,200 1,900 35,800 20 25,200 48 Direct 1. Using activity-based costing, prepare a schedule showing the calculations of the activity-based overhead rates (per cost driver). (Round answers to 2 decimal places, e.g. 15.25.) Activity-based overhead rates Employee training per DL dollar Typing and secretarial per report/form Computing per minute $ Facility rental per employee 2. Prepare a schedule assigning each activity's overhead cost pool to each service based on the use of the cost drivers. Audit Tax Training S $ Typing and secretarial Computing Rent Travel (Direct) Total overhead assigned $ Classify each of the activities as a value-added activity or a non-value-added activity. Employee training Typing and secretarial Computing Facility rental Travel