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Lewis and Stark 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 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 overhead 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 for purposes of analysis and comparison. The following overhead data are collected to develop the comparison Estimated Use of Cost Drivers per Service Estimated Use Estimated Activity Cost Pools Cost Drivers Overhead Cost Drivers Audit Tax Employee training Direct labor dollars $220.500 $ 1.837,500 $ 1,153,000 $ 684,500 Typing and secretariat Number of reports/forms 76,300 2.500 800 1,700 Computing 216,000 80,000 27.000 33.000 Facility rental Number of employees 141,000 22 of Number of minutes 40 18 Travel Per expense reports 81.200 Direct 56,000 25,300 $735.000 Using activity-based costing, prepare a schedule showing the computations of the activity based overhead rates (per cost driver) (Round overhead rates to 2 decimal places, es. 12.25.) Estimated Overhead Expected Use of Cost Drivers per Activity Activity-Based Overhead Rates 220500 $ per DL Direct labor dollars dollar 76300 Reports/forms $ per report/form 216000 Minutes $ per minute 141000 Employees per employee 81200 Direct Direct 735000

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