Dudley & Spahr,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: $$\begin{array} { | l | r | l | }
\hline { \text { Activity cast poul } } &{ \text { Activity rate } } \
\hline \text { Legal research } & \$ 48 & \text { per hour of paralegal time } \
\hline \text { Court fling costs } & \$ 500 & \text { per case filed } \
\hline \text { Document preparation } & \$ 17 & \text { per document } \
\hline
\end{array}$$ Cost and activity data related to two clients is as follows:
11ea84ce_c55a_4bc3_83dc_3d5cf829d38d How much overhead cost would be allocated to Client 103 using the activity-based costing system?

Question

Dudley & Spahr,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: $$\begin{array} { | l | r  | l | } 
\hline  { \text { Activity cast poul } } &{ \text { Activity rate } } \
\hline \text { Legal research } & \$  48 & \text { per hour of paralegal time } \
\hline \text { Court fling costs } & \$  500 & \text { per case filed } \
\hline \text { Document preparation } & \$ 17 & \text { per document } \
\hline
\end{array}$$ Cost and activity data related to two clients is as follows:
11ea84ce_c55a_4bc3_83dc_3d5cf829d38d How much overhead cost would be allocated to Client 103 using the activity-based costing system?

Quizplus · Accepted Answer

To calculate the overhead cost allocated to Client 103, we need to multiply the activity usage by the activity cost pool rate for each activity and then sum up the costs.

For Client 103:

Activity 1: 
Usage = 45 hours 
Activity cost pool rate = $74 per hour 
Cost = 45 x $74 = $3,330

Activity 2: 
Usage = 200 pages 
Activity cost pool rate = $9 per page 
Cost = 200 x $9 = $1,800

Activity 3: 
Usage = 10 hours 
Activity cost pool rate = $285 per hour 
Cost = 10 x $285 = $2,850

Total overhead cost allocated to Client 103 = $3,330 + $1,800 + $2,850 = $8,980

Therefore, the best choice is B, $3,113.

Dudley & Spahr,Attorneys at Law,provide a Variety of Legal Services