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AJ Accounting us of ABC Costing

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AJ Accounting performs two types of services, Audit and Tax. AJ's overhead costs consist of computer support, $200,000; and legal support, $100,000. Information on the two services is:

Audit Tax

Direct labor cost $50,000 $100,000
CPU minutes 40,000 10,000
Legal hours used 200 800

Overhead applied to audit services using activity-based costing is

Selected Answer: C. $200,000.
Correct Answer: A. $180,000.

My question is how do you come up with 180,000

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Solution Summary

This solution provides the calculations for allocation and overhead applied in the attached Excel file.

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