Determine actual cost and operating data

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Reference no: EM1311231

Determine the under applied overhead in ligitation department.

Winkle, Kotter, and Zale is a small law firm that contains 10 partners and 10 support persons. The firm employs a job-order costing system to accumulate costs chargeable to each client, and it is organized into two departments-the Research and Documents Department and the Litigation Department. The firm uses predetermined overhead rates to charge the costs of these departments t its clients. At the beginning of the current year, the firm's management made the following estimates for the year:

	Department
	Research and Documents	Litigation
Research-hours	20,000	-
Direct attorney-hours	9,000	16,000
Materials and supplies	$18,000	$5,000
Direct attorney cost	$430,000	$800,000
Departmental overhead cost	$700,000	$320,000

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 cost 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	18	-
Direct attorney-hours	9	42
Materials and supplies	$50	$30
Direct attorney cost	$410	$2,100

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.

Reference no: EM1311231

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