tcharged to Case 618-3? Show computations by department and in total for the case. 3. What would be the total cost Departments Research and Documents Litigation Total Materials and supplies Direct attorney cost Overhead cost applied Total cost 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 22,700 8,400 $18,400 $ 399,400 $769,500 Research-hours Direct attorney-hours Materials and supplies Direct attorney cost Departmental overhead cost 14,600 $5,100 $725,800 $300,800 Determine the amount of underapplied or overapplied overhead cost in each department for the year Department Research and Documents Litigation Departmental overhead cost incumred Departmental overhead cost applied Underapplied (or overapplied) overhead
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Winkle, Kotter, and Zale is a small law firm that contains 10 partners and 12 support persons. The firm employs a
| Department | |||||||
| Research and Documents |
Litigation | ||||||
| Research-hours | 20,400 | - | |||||
| Direct attorney-hours | 9,300 | 16,400 | |||||
| Materials and supplies | $ | 17,700 | $ | 5,500 | |||
| Direct attorney cost | $ | 430,100 | $ | 799,400 | |||
| Departmental overhead cost | $ | 714,000 | $ | 311,766 | |||
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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 attorney cost.
The costs charged to each client are made up of three elements: materials and supplies used, direct attorney costs incurred, and an applied amount of overhead from each department in which work is performed on the case.
Case 618-3 was initiated on February 10 and completed on June 30. During this period, the following costs and time were recorded on the case:
| Department | |||||||
| Research and Documents |
Litigation | ||||||
| Research-hours | 17 | - | |||||
| Direct attorney-hours | 10 | 42 | |||||
| Materials and supplies | $ | 52 | $ | 31 | |||
| Direct attorney cost | $ | 410 | $ | 2,000 | |||
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Required:
1-a. Compute the predetermined overhead rate used during the year in the Research and Documents Department.
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1-b. Compute the predetermined overhead rate used during the year in the Litigation Department.
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2. Using the rates you computed in (1) above, compute the total overhead cost applied to Case 618–3.
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3. What would be the total cost charged to Case 618–3? Show computations by department and in total for the case.
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 | 22,700 | - | |||||
| Direct attorney-hours | 8,400 | 14,600 | |||||
| Materials and supplies | $ | 18,400 | $ | 5,100 | |||
| Direct attorney cost | $ | 399,400 | $ | 725,800 | |||
| Departmental overhead cost | $ | 769,500 | $ | 300,800 | |||
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Determine the amount of underapplied or overapplied overhead cost in each department for the year.
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