Ecom Insert Table Chart Text Shape Media Comment Lewis and Stark is a public accounting firm that offers two primary services, auditing and ta 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 contentio is the assignment of overhead. The tax partners argue for assigning overhead on the basis o 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 Activity Cost Pools Cost Drivers Estimated Overhead Expected Use of Cost Drivers Expected Use of Cost Drivers Per Service Audit Tax Direct labor dollars $216,000 $1,800,000 $1,100,000 $700,000 Employee training Typing and Secretarial Computing 76,200 2,500 800 Number of reports/forms Number of minutes 1,700 204,000 60,000 27,000 33,000 Facility Rental Travel 142,500 40 22 Number of employees Per expense reports 18 81,300 Direct 56,000 25,300 $720.000 Instructions (a) Using traditional product costing as proposed by the tax partners, compute the total overhead cost assigned to both services (audit and tax) of Lewis and Stark. (b) (1) Using activity-based costing, prepare a schedule showing the computations of activity based overhead rates (per cost driver). (2) Prepare a schedule assigning each activity's overhead cost pool to each service based on the use of the cost drivers. (c) Comment on the comparative overhead cost for the two services under both traditional costing and ABC