Question

Horton, Reiser, and Associates, a law firm, employs ABC. The following budgeted data for each of the activity cost pools is provided for the year 2019. Activity Cost Pools Estimated Overhead Expected Use of Cost Drivers per Activity Researching legal issues $ 31,500 900 research hours Preparing legal documents 480,000 30,000 pages Meeting with clients 1,760,000 8,800 professional hours During 2019 the firm worked 660 research hours, 10,000 professional hours, and prepared 25,000 document pages. Compute the total overhead applied during 2019.

Answer 1

Answer:

$2,423,100

Explanation:

The total overhead applied is calculated as follows.

Calculate the $ rate per activity

Research = $31,500/ 900 hours

= $35/hour.

Preparation = $480,000/ 30,000 pages

= $16/page.

Meeting = $1,760,000/ 8,800 hours

=$200/hour.

Multiply these rates with actual activity to calculate total overhead applied.

Research = $35/hour * 660

= $23,100

Preparation = $16/page * 25,000

= $400,000

Meeting = $200/hour * 10,000

= $2,000,000

Research + Preparation + Meeting

$23,100 + $400,000 + $2,000,000 = $2,423,100.