Managerial Accounting: P3-8 The law firm of Dewey, Louie and Howe



Click here to order this paper @Superbwriters.com. The Ultimate Custom Paper Writing Service

Managerial Accounting
P3-8 Allocating Overhead Costs
The law firm of Dewey, Louie and Howe has six lawyers and ten support people. The firm uses job-order costing system to accumulate cost by client. There are two departments, research and litigation. The firm uses a different predetermined overhead rate for each department. At the beginning of the year, the partners made the following estimates:
Department
Research    Litigation
Planned attorney hours  2,500   11,600
Number of clients  1,000   230
Legal Supplies  $12,000   $4,600
Direct attorney cost  $132,000   $696,000
Department overhead  $70,000   $406,000

The cost to clients are separated into three components: supplies, attorney costs and overhead. Both departments base overhead on the number of attorney hours charged. Supplies are charged on a per-client basis. Clients are billed all costs plus 20%. Case DR 9312 was open on January 3 and closed June 17. During that period, the following costs and time were recorded.
Attorney hours, research  55
Attorney hours, litigation  175
Attorney cost  $13,800

Required:
a. Compute the rate each department should use to assign overhead cost.
b. Compute the amount per client that each department should use to allocate supply cost.
c. Using the rates computed in requirements (A) and (B), compute the total cost of case DR9312, including overhead, supply charges and attorney fees.
d. Calculate the billing for case DR9312.



Click here to order this paper @Superbwriters.com. The Ultimate Custom Paper Writing Service

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>