Refer to the illustration of overhead application in the Midtown Advertising Agency on pp.106–107. Suppose the firm used a single cost driver, total staff compensation, to apply overhead costs to each ad contract.

Required:

1. Compute the total budgeted staff compensation: both partner and artistic staff compensation.

2. Compute overhead rate on the basis of this single lost driver.

3. Recalculate the applied overhead for the Super Scoop Ice Cream Company contract.

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.