Refer to the illustration of overhead application in the Small World Advertising example. Suppose the firm used a single cost driver, total staff compensation, to apply overhead costs to each advertising engagement.
Required:
1. Compute the total budgeted staff compensation: both partner and associate staff compensation.
2. Compute Small World's overhead rate on the basis of this single cost driver.
3. Recalculate the applied overhead for the Eye Style Global engagement.
4. Compare the applied overhead using the single cost driver with the applied overhead computed using the two cost drivers used in the text illustration.