Hobart, Evans, and Nix 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 year, the firm's management made the following estimates for the year: Department Research and Documents Litigation Research-hours 31,000 — Direct attorney-hours 11,800 23,400 Legal forms and supplies £ 21,100 £ 6,700 Direct lawyer cost 593,300 1,186,700 Departmental overhead cost 930,000 474,680 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 lawyer cost. The costs charged to each client are made up of three elements: legal forms and supplies used, direct lawyer costs incurred, and an applied amount of overhead from each department in which work is performed on the case. Case 418-3 was initiated on February 16 and completed on May 23. During this period, the following costs and time were recorded on the case: Department Research and Documents Litigation Research-hours 34 — Direct attorney-hours 9 148 Legal forms and supplies £80 £50 Direct lawyer cost 340 5,800 Required: 1. Compute the predetermined overhead rate used during the year in the Research and Documents Department. (Round your answer to 2 decimal places.) Compute the predetermined overhead rate used during the year in the Litigation Department. (Round your answer to 2 decimal places.) 2. Compute the total overhead cost applied to case 418-3. (Round your answer to the nearest whole number.) 3. What would be the total cost charged to case 418-3? Show computations by department and in total for the case. (Round your answer(s) to the nearest whole number.)
Hobart, Evans, and Nix is a small law firm that contains 10 partners and 12 support persons. The firm employs a
Department
Research and Documents Litigation
Research-hours 31,000 —
Direct attorney-hours 11,800 23,400
Legal forms and supplies £ 21,100 £ 6,700
Direct lawyer cost 593,300 1,186,700
Departmental overhead cost 930,000 474,680
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 lawyer cost.
The costs charged to each client are made up of three elements: legal forms and supplies used, direct lawyer costs incurred, and an applied amount of overhead from each department in which work is performed on the case.
Case 418-3 was initiated on February 16 and completed on May 23. During this period, the following costs and time were recorded on the case:
Department
Research and Documents Litigation
Research-hours 34 —
Direct attorney-hours 9 148
Legal forms and supplies £80 £50
Direct lawyer cost 340 5,800
Required:
1. Compute the predetermined overhead rate used during the year in the Research and Documents Department. (Round your answer to 2 decimal places.)
Compute the predetermined overhead rate used during the year in the Litigation Department. (Round your answer to 2 decimal places.)
2. Compute the total overhead cost applied to case 418-3. (Round your answer to the nearest whole number.)
3. What would be the total cost charged to case 418-3? Show computations by department and in total for the case. (Round your answer(s) to the nearest whole number.)
4. At the end of the year, the firm's records revealed the following actual cost and operating data for all cases handled during the year:
Department
Research and Documents Litigation
Research-hours 33,500 —
Direct attorney-hours 10,400 19,700
Legal forms and supplies £25,300 £8,100
Direct lawyer cost 527,500 988,900
Departmental overhead cost 963,400 415,300
Determine the amount of under- or overapplied overhead cost in each department for the year. (Round your answer(s) to the nearest whole number. Enter your answers as a positive values.)
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