Morgan, Player, and Associates, a law firm, employs ABC. The following budgeted
ID: 2341622 • Letter: M
Question
Morgan, Player, and Associates, a law firm, employs ABC. The following budgeted data for each of the activity cost pools is provided for the year 2013. Estimated Expected Use of Activity Cost Pools Researching legal issues Overhead Cost Drivers per Activity $ 31,500 1,760,000 480,000 900 research hours 8,800 professional hours 30,000 pages Meeting with clients Preparing legal documents During 2013 the firm experienced 660 research hours, prepared 25,000 document pages, and 10,000 professional hours. Instructions Compute the total overhead applied during 2013. Ans: NA, LO: 4, Bloom: AP, Dificlty, Medium, Min: 3, AACSB: Anallc, ICPA B8: Strategiocitical Tinking, AICPA F. Measurement,ANICPA PO Problem Solving, IMA: Cost MgmtExplanation / Answer
Answer:
Activity cost Tool
Estimated
Overhead
Total
Activity
Overhead
rate
A
B
C=A/B
Research and legal issue
31,500
900
35
Per reserch hour
Meeting with client
1,760,000
8800
200
Per Professional hour
Preparing legal document
480,000
30,000
16
Per Page
Cost drive
Overhead
rate
Total
Overhead
A
B
C=A*B
660 research hour
35
23100
10,000 Professional hour
200
2000000
25,000 Per Page
16
400000
Total Overhead applied in 2013
2423100
Total Overhead applied in 2013 =2,423,100
Activity cost Tool
Estimated
Overhead
Total
Activity
Overhead
rate
A
B
C=A/B
Research and legal issue
31,500
900
35
Per reserch hour
Meeting with client
1,760,000
8800
200
Per Professional hour
Preparing legal document
480,000
30,000
16
Per Page
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