Winkle, Kotter, and Zale is a small law firm that contains 10 partners and 12 support persons. The firm employs a job-order costingsystem to accumulate costs chargeable to each client, and it is organized into two departments-the Research and DocumentsDepartment and the Litigation Department. The firm uses predetermined overhead rates to charge the costs of these departments to itsclients. At the beginning of the curent year, the firm's management made the following estimates for the yearDepartmentResearchandDocuments20,4009,300$ 17,700$ 430,100$714,000LitigationResearch-hoursDirect attorney-hoursMaterials and suppliesDirect attorney costDepartmental overhead cost16.400$ 5,500$ 799.400$ 311,766The predetermined overhead rate in the Research and Documents Department is based on research-hours, and the rate in the LitigationDepartment is based on direct attorney costThe costs charged to each client are made up of three elements: materials and supplies used, direct attorney costs incurred, and anapplied 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 onthe case:DepartmentResearchandDocuments Litigation1710$ 52Research-hoursDirect attorney-hoursMaterials and suppliesDirect attorney cost42$31$2,000$410Required:1-a Compute the predetermined overhead rate used during the year in the Research and Documents DepartmentPredetermined overhead rateper hour1-b. Compute the predetermined overhead rate used during the year in the Litigation DepartmentPredetermined overhead rate% of direct attorney cost2 Using the rates you computed in (1) above, compute the total overhead cost applied to Case 618-3seducation.com/hm.tpx1/3Chapter 4 HomeworkTotal overhead cost
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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 curent year, the firm's management made the following estimates for the year Department Research and Documents 20,400 9,300 $ 17,700 $ 430,100 $714,000 Litigation Research-hours Direct attorney-hours Materials and supplies Direct attorney cost Departmental overhead cost 16.400 $ 5,500 $ 799.400 $ 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 Research and Documents Litigation 17 10 $ 52 Research-hours Direct attorney-hours Materials and supplies Direct attorney cost 42 $ 31 $2,000 $410 Required: 1-a Compute the predetermined overhead rate used during the year in the Research and Documents Department Predetermined overhead rate per hour 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 seducation.com/hm.tpx 1/3 Chapter 4 Homework Total overhead cost
1-a
Calculate predetermined overhead rate for Research and Document Department:
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Departmental cost (A) Research hours (B) $714,000 20,400 $35 Predetermined overhead rate (A+ B)
1-b
Calculate predetermined overhead rate for ...
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Departmental direct attorney cost (A) Department overhead cost (B) Predetermined overhead rate (B A*100) $799,400 $311,766 39.00%
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Cost Accounting
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