Overhead applied to audit services


Question: AJ Accounting performs two types of services, Audit and Tax. AJ's overhead costs consist of computer support, $200,000; and legal support, $100,000. Information on the two services is:

Audit Tax

Direct labor cost $50,000 $100,000
CPU minutes 40,000 10,000
Legal hours used 200 800

Overhead applied to audit services using activity-based costing is:

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Accounting Basics: Overhead applied to audit services
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