USGant Accounting performs two types of services, Audit andTax. Gant's overhead costs consist of computer$276000; and legal support, $138000. Information on theSsupport,ntraltwo services is:AuditТахDirect labor cost$50000 $100000CPU minutes4000010000200800Legal hours usedOverhead applied to audit services using traditional costingisO $165600.O $276000.$138000.$248400.

Question
Asked Oct 13, 2019
US
Gant Accounting performs two types of services, Audit and
Tax. Gant's overhead costs consist of computer
$276000; and legal support, $138000. Information on the
S
support,
ntral
two services is:
Audit
Тах
Direct labor cost
$50000 $100000
CPU minutes
40000
10000
200
800
Legal hours used
Overhead applied to audit services using traditional costing
is
O $165600.
O $276000.
$138000.
$248400.
help_outline

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US Gant Accounting performs two types of services, Audit and Tax. Gant's overhead costs consist of computer $276000; and legal support, $138000. Information on the S support, ntral two services is: Audit Тах Direct labor cost $50000 $100000 CPU minutes 40000 10000 200 800 Legal hours used Overhead applied to audit services using traditional costing is O $165600. O $276000. $138000. $248400.

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Expert Answer

Step 1

Traditional costing system allocated indirect cost either on the basis of direct labor hours or number of units produced. In the given case, as there is no information on number of units/direct labor hours, indirect cost shall be distributed based on Direct Labor cost.

Step 2

Working:

AG
АН
Al
48
49
Computation of Overhead
|Amount
50 Particulars
%
51 Direct Labor Cost
52 Audit
53| Таx
54 Total Cost
|EАH52/АH54
EАH53/АH54
50000
100000
|EАHН53+АН52
55
56 Total Overhead Cost
57 Computer support
58 Legal Support
59 Total Overhead Cost
60 Cost Applied to Audit Services
61 Cost Applied to Tax Services
276000
138000
EАH57+АH58
AH59* A152
-AH59*AI53
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AG АН Al 48 49 Computation of Overhead |Amount 50 Particulars % 51 Direct Labor Cost 52 Audit 53| Таx 54 Total Cost |EАH52/АH54 EАH53/АH54 50000 100000 |EАHН53+АН52 55 56 Total Overhead Cost 57 Computer support 58 Legal Support 59 Total Overhead Cost 60 Cost Applied to Audit Services 61 Cost Applied to Tax Services 276000 138000 EАH57+АH58 AH59* A152 -AH59*AI53

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Step 3

Computation of ...

AG
AH
Al
48
Computation of Overhead
49
50 Particulars
51 Direct Labor Cost
Amount %
50000 0.33333
52 Audit
53 Tax
54 Total Cost
100000 0.66667
150000
55
56 Total Overhead Cost
57 Computer support
58 Legal Support
Total Overhead Cost
60 Cost Applied to Audit Services
61 Cost Applied to Tax Services
276000
138000
414000
138000
276000
help_outline

Image Transcriptionclose

AG AH Al 48 Computation of Overhead 49 50 Particulars 51 Direct Labor Cost Amount % 50000 0.33333 52 Audit 53 Tax 54 Total Cost 100000 0.66667 150000 55 56 Total Overhead Cost 57 Computer support 58 Legal Support Total Overhead Cost 60 Cost Applied to Audit Services 61 Cost Applied to Tax Services 276000 138000 414000 138000 276000

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