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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.