Winkle, Kotter, and Zale is a small law firm that contains 10 partners and 12 su

Question

Winkle, Kotter, and Zale is a small law firm that contains 10 partners and 12 support persons. The firm employs a job-order costing system to accumulate costs chargeable to each client, and it is organized into two departments—the Research and Documents Department and the Litigation Department. The firm uses predetermined overhead rates to charge the costs of these departments to its clients. At the beginning of the current year, the firm's management made the following estimates for the year:

     

The predetermined overhead rate in the Research and Documents Department is based on research-hours, and the rate in the Litigation Department is based on direct attorney cost.

The costs charged to each client are made up of three elements: materials and supplies used, direct attorney costs incurred, and an applied amount of overhead from each department in which work is performed on the case.

Case 618-3 was initiated on February 10 and completed on June 30. During this period, the following costs and time were recorded on the case:

    

Department Research
and Documents Litigation Research-hours 19,800 - Direct attorney-hours 8,900 15,700 Materials and supplies $ 18,100 $ 4,500 Direct attorney cost $ 429,500 $ 799,700 Departmental overhead cost $ 673,200 $ 311,883 Required: 1-a. Compute the prodebarmined ovamead rate used during tha year in the Reseanch and Documents Depsarment per hour 1-b. Compute the prodebormined ovamead ate used during tha year in the Litigstion Depatmant ato 2 Using the rates you compuned in (1) abave, compute the boal avarhead coat appliad to Case 618-3 3. What would ba the total cost charged to Case 618-37 Show computations by departmant and in total for the case Dapartments and Ltigation Total Matoriails and supplies Dinact attomay cost Ovarhond cost applied Total coc 4. At tha end of tha year, the mis nacords nevaalad the tallowing achual cost and aparating data for all cases handled during the yoar Dinct Matorials and supplics Dinct atomay cost Departmantal overhead coct 8,000 19,8006,400 39,800 724,300 770,700 300,400 Debermine the amount af underapplied ar averapplied overhasd cost in sch depsarment far the year Racearoh and u Doouments Litgstion Departmantal overhead ooct appiad

Explanation / Answer

Requirement 1a) Research and Document Department Predetermined overhead rate       = 34 Per Hour =Departmental Overhead cost / total research hours Total Departmental Overhead cost 673200 Total Research Hours 19800 Requirement 1b) Litigation Department Predetermined Overhead rate      = 39 % = Departmental Overhead cost / total direct attorny cost% Departmental Overhead cost 311883 Total direct attorney cost 799700 Requirement 2 Computation of total overhead cost applied to case 618-3 Total research hours used by Reaserch and document department 16 Rate per Research hour 34 Total Overhead cost applied to Research and document department 544 Total Direct attorney cost in Litigation department 1800 Predetermined overhead rate of Litigation department 39% Total overhead cost applied in Litigation department 702 Total Overhead cost applied to case 618-3 1246 Requirement 3 Total cost charged to case 618-3 Research & Document Department Litigation Department Total Materials & supplies 52 32 84 Direct attorney cost 450 1800 2250 Departmental overhead cost 544 702 1246 Total cost charged to case 618-3 1046 2534 3580 Requirement 4 Research & Document Department Litigation Department Departmental Overhead cost incurred 770700 300400 Departmental Overhead cost applied 771800 282477 Underapplied (or overapplied Overhead) -1100 17923

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.