Prepare a schedule assigning each activitys overhead cost pool to each service based on the use of the cost drivers.

Problem 18-5A Lewis and Stark is a public accounting firm that offers two primary services, auditing and tax-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 contention is the assignment of overhead. The tax partners argue for assigning overhead on the basis of 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. Expected Use of Cost Drivers per Service Estimated Overhead Expected Use of Cost Drivers Cost Drivers Audit Activity Cost Pools Employee training Typing and secretaia Tax $216,000 76,200 204,000 142,500 81,300 $720,000 $1,800,000 $1,100,000 $700,000 1,700 33,000 18 25,300 Direct labor dollars 2,500 60,000 40 Direct Number of reports/forms 800 Number of minutes Number of employees Per expense reports 27,000 Facility rental Travel 56,000 Your answer is correct. 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. Audit Tax Total overhead cost assigned 440000 280000