Question

2. The most likely relevant facility-level cost driver for heating costs in the factory is Data for Questions 3,4 and 5 Gant Accounting performs two types of services. Audit and Tax, Gant's overhead costs consist of computer support, $300,000. und legal support, $150.000. Information on the two services is: Direct labor costs CPU minutes Legal hours used AUDIT $600,000 40,000 200 TAX $900,000 10,000 800 If Gant allocates overhead using the traditional approach based upon direct labor cost, the overhead allocated to the services will be: Audit overhead Tax overhead

Answer 1

Answer 3

$      180,000	Audit Overhead
$      270,000	Tax overhead

Calculations:

Computer support	$      300,000
Legal support	$      150,000
Total Overheads (A)	$      450,000
Direct labor Costs (B)	$   1,500,000
Overhead rate (C=A/B)	$            0.30
Audit Overhead (0.3*600000)	$      180,000
Tax overhead (0.3*900000)	$      270,000

In case of any doubt, please comment.