Gant Accounting performs two types of services, Audit and Tax.Gant's overhead costs consist of computer support, $300,000; and legal support, $150,000.Information on the two services is: Overhead applied to audit services using activity-based costing is
A)$150,000.
B)$180,000.
C)$270,000.
D)$300,000.

Question

Quizplus · Accepted Answer

The total overhead costs are $450,000 ($300,000 for computer support and $150,000 for legal support). If overhead is applied based on activity-based costing, and assuming the audit services consume 60% of the total overhead (as $270,000 is 60% of $450,000), then $270,000 is applied to audit services.

Gant Accounting Performs Two Types of Services, Audit and Tax