Stellar Finance provides two types of services: Consulting and Advisory. Stellar's overhead costs consist of software support ($180,000) and legal compliance support ($90,000). Information on the two services is: Consulting Advisory Direct labor cost Software minutes $60,000 $90,000 30,000 20,000 700 Legal support hours used 300 Under traditional costing, overhead is applied based on direct labor cost. How much overhead should be allocated to Consulting services?

Stellar Finance provides two types of services: Consulting and Advisory. Stellar's overhead costs consist of software support ($180,000) and legal compliance support ($90,000). Information on the two services is: Consulting Advisory Direct labor cost Software minutes $60,000 $90,000 30,000 20,000 700 Legal support hours used 300 Under traditional costing, overhead is applied based on direct labor cost. How much overhead should be allocated to Consulting services?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 1EA: Steeler Towel Company estimates its overhead to be $250,000. It expects to have 100,000 direct labor...

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Steeler Towel Company estimates its overhead to be $250,000. It expects to have 100,000 direct labor hours costing $2,500,000 in labor and utilizing 12,500 machine hours. Calculate the predetermined overhead rate using: A. Direct labor hours B. Direct labor dollars C. Machine hours
Using the traditional costing method, how much overhead should be applied to consulting services?
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