Winkle, Kotter, and Zale is a small law firm that contains 10 partners and 10 support persons.
Question:
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:
Required:
1. Compute the predetermined overhead rate used during the year in the Research and Documents Department. Compute the rate used in the Litigation Department.
2. Using the rates you computed in (1) above, compute the total overhead cost applied to Case 618-3.
3. What would be the total cost charged to Case 618-3? 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:
Determine the amount of underapplied or overapplied overhead cost in each department for theyear.
Step by Step Answer:
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer