Assume Carolina’s CPA Group uses a traditional costing technique to allocate overhead costs to customers for evaluating profitability. Total annual budgeted overhead costs are estimated at $750,000. Direct labor dollars were selected as the most appropriate cost driver as consulting operations are labor-intensive. Assume total budgeted direct labor costs are estimated at $500,000 (auditing services budgeted direct labor costs, $200,000 and tax services budgeted direct labor costs, $300,000). How much overhead would be budgeted to auditing services?

1. Assume That Carolina’s CPA Group uses a traditional costing technique to allocate overhead costs to customers for evaluating profitability. Total annual budgeted overhead costs are estimated at $750,000. Direct labor dollars were selected as the most appropriate cost driver as consulting operations are labor-intensive. Assume total budgeted direct labor costs are estimated at $500,000 (auditing services budgeted direct labor costs, $200,000 and tax services budgeted direct labor costs, $300,000). How much overhead would be budgeted for auditing services?

$300,000

$200,000

$450,000

Cannot be determined

Answer rating: 100% (QA)

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