Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Winkle, Kotter, and Zale is a small law firm that contains 10 partners and 12 support persons. The firm employs a job-order costing system to

Winkle, Kotter, and Zale is a small law firm that contains 10 partners and 12 support persons. The firm employs a job-order costing system to accumulate costs chargeable to each client, and it is organized into two departmentsthe Research and Documents Department and the Litigation Department. The firm uses predetermined overhead rates to charge the costs of these departments to its clients. At the beginning of the current year, the firm's management made the following estimates for the year:

Department
Research and Documents Litigation
Research-hours 20,200 -
Direct attorney-hours 9,100 16,100
Materials and supplies $ 18,100 $ 4,900
Direct attorney cost $ 429,600 $ 800,100
Departmental overhead cost $ 686,800 $ 312,039

The predetermined overhead rate in the Research and Documents Department is based on research-hours, and the rate in the Litigation Department is based on direct attorney cost.

The costs charged to each client are made up of three elements: materials and supplies used, direct attorney costs incurred, and an applied amount of overhead from each department in which work is performed on the case.

Case 618-3 was initiated on February 10 and completed on June 30. During this period, the following costs and time were recorded on the case:

Department
Research and Documents Litigation
Research-hours 18 -
Direct attorney-hours 9 44
Materials and supplies $ 50 $ 31
Direct attorney cost $ 420 $ 2,200

Required:

1-a. Compute the predetermined overhead rate used during the year in the Research and Documents Department.

1-b. Compute the predetermined overhead rate used during the year in the Litigation Department.

2. Using the rates you computed in (1) above, compute the total overhead cost applied to Case 6183.

3. What would be the total cost charged to Case 6183? Show computations by department and in total for the case.

4. At the end of the year, the firms records revealed the following actual cost and operating data for all cases handled during the year:

Department
Research and Documents Litigation
Research-hours 23,200 -
Direct attorney-hours 8,200 15,300
Materials and supplies $ 18,000 $ 5,100
Direct attorney cost $ 400,300 $ 725,900
Departmental overhead cost $ 770,900 $ 299,400

Determine the amount of underapplied or overapplied overhead cost in each department for the year.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Energy Audit Of Building Systems An Engineering Approach

Authors: Moncef Krarti

1st Edition

0849395879, 978-0849395871

More Books

Students also viewed these Accounting questions

Question

What does stickiest refer to in regard to social media

Answered: 1 week ago

Question

What aspects would it be impossible to capture?

Answered: 1 week ago

Question

Enhance your words with effective presentation aids

Answered: 1 week ago