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		20,100				-
Direct attorney-hours		8,700				15,600
Materials and supplies	$	18,300			$	5,300
Direct attorney cost	$	429,100			$	799,300
Departmental overhead cost	$	703,500			$	327,713

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

16

-

Direct attorney-hours

11

42

Materials and supplies

$

50

$

31

Direct attorney cost

$

450

$

1,800

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

Predetermined overhead rate

per hour

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

Predetermined overhead rate

%

of direct attorney cost

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

Total overhead cost

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

	Departments
	Research and Documents	Litigation	Total
Materials and supplies
Direct attorney cost
Overhead cost applied
Total cost	$0	$0

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		23,400				-
Direct attorney-hours		7,900				15,300
Materials and supplies	$	19,500			$	6,800
Direct attorney cost	$	399,100			$	724,600
Departmental overhead cost	$	769,100			$	300,600

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

	Department
	Research and Documents	Litigation
Departmental overhead cost incurred
Departmental overhead cost applied
Underapplied (or overapplied) overhead	$0	$0