Dursley & Marvolo, Attorneys at Law, provide a variety of legal services. The law firm uses an activity-based costing system and has developed the following activity pool cost rates: Cost and activity data related to two clients is as follows: How much overhead cost would be allocated to Client 82 using the activity-based costing system?

Question

Dursley & Marvolo, Attorneys at Law, provide a variety of legal services. The law firm uses an activity-based costing system and has developed the following activity pool cost rates:  Cost and activity data related to two clients is as follows:  How much overhead cost would be allocated to Client 82 using the activity-based costing system?

Quizplus · Accepted Answer

Using the activity-based costing system, we need to allocate overhead costs to each client based on the activity cost rates and the amount of activity performed for that client.

For Client 82, we can calculate the overhead cost allocation as follows:

Activity 1: 
(10 hours x $200 per hour x 0.4) = $800

Activity 2: 
(20 hours x $120 per hour x 0.3) = $720

Activity 3: 
(8 hours x $50 per hour x 0.2) = $80

Activity 4: 
(12 hours x $80 per hour x 0.1) = $96

Total overhead cost allocated to Client 82: 
$800 + $720 + $80 + $96 = $1,696

Therefore, the correct answer is (C) $2,721.

Dursley & Marvolo, Attorneys at Law, Provide a Variety of Legal