Chapter 9, Problem 9E

The partners of Rozow and Cardis, CPAs, decide to implement an activity-based costing system for their firm. They identify the following three cost pools and budgeted amounts for each for the coming year: fringe benefits, $300,000; administrative support, $175,000; and audit support, $450,000. It is determined that the best cost driver for fringe benefits is professional labor dollars ($1,000,000); administrative support is partner labor hours (3,500); and audit support is professional labor hours (15,000).

Compute the budgeted overhead rates for each of the three cost pools.