# tcharged to Case 618-3? Show computations by department and in total for the case. 3. What would be the total cost Departments Research and Documents Litigation Total Materials and supplies Direct attorney cost Overhead cost applied Total cost 4. At the end of the year, the firm's records revealed the following actual cost and operating data for all cases handled during the year: Department Research and Documents Litigation 22,700 8,400 \$18,400 \$ 399,400 \$769,500 Research-hours Direct attorney-hours Materials and supplies Direct attorney cost Departmental overhead cost 14,600 \$5,100 \$725,800 \$300,800 Determine the amount of underapplied or overapplied overhead cost in each department for the year Department Research and Documents Litigation Departmental overhead cost incumred Departmental overhead cost applied Underapplied (or overapplied) overhead

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:

 Department Researchand Documents Litigation Research-hours 20,400 - Direct attorney-hours 9,300 16,400 Materials and supplies \$ 17,700 \$ 5,500 Direct attorney cost \$ 430,100 \$ 799,400 Departmental overhead cost \$ 714,000 \$ 311,766

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 Researchand Documents Litigation Research-hours 17 - Direct attorney-hours 10 42 Materials and supplies \$ 52 \$ 31 Direct attorney cost \$ 410 \$ 2,000

Required:

1-a. Compute the predetermined overhead rate used during the year in the Research and Documents Department.

1-b. Compute the predetermined overhead rate used during the year in the Litigation Department.

 Predetermined overhead rate % of direct attorney cost

2. Using the rates you computed in (1) above, compute the total overhead cost applied to Case 618–3.

3. What would be the total cost charged to Case 618–3? Show computations by department and in total for the case.

4. At the end of the year, the firm’s records revealed the following actual cost and operating data for all cases handled during the year:

 Department Researchand Documents Litigation Research-hours 22,700 - Direct attorney-hours 8,400 14,600 Materials and supplies \$ 18,400 \$ 5,100 Direct attorney cost \$ 399,400 \$ 725,800 Departmental overhead cost \$ 769,500 \$ 300,800

Determine the amount of underapplied or overapplied overhead cost in each department for the year.