(see inage attached)

How much overhead does ABC costing assign to the audit division?

a. $353,269

b. $369,759

c. $382,559

d. $385,622

P18-5A 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 Expected Use Use of of Cost Drivers Estimated cost per Service Overhead Drivers Audit Tax $216,000 $1,800,000 $1,100,000 $700,000 Activity Cost Pools Cost Drivers Employee training Direct labor dollars Typing and Number of reports/ secretarial forms Computing Number of minutes Facility rental Number of employees Travel Per expense reports 800 27,000 1,700 33,000 76,200 204,000 142,500 81,300 $720,000 2,500 60,000 40 Direct 22 18 56,000 25,300