Refer to the illustration of overhead application in the Small World Advertising example. Suppose the firm used a single cost driver, total staff compensation, to apply overhead costs to each

Refer to the illustration of overhead application in the Small World Advertising example. Suppose the firm used a single cost driver, total staff compensation, to apply overhead costs to each advertising engagement. Required : 1. Compute the total budgeted staff compensation: both partner and associate staff compensation. 2. Compute Small World’s overhead rate on the basis of this single cost driver. 3. Recalculate the applied overhead for the EyeStyle Global engagement. 4. Compare the applied overhead using the single cost driver with the applied overhead computed using the two cost drivers used in the text illustration. Transcribed Image Text: Small World Advertising – Excel
Exhibit 3-13
Small World Advertising:
Annual Overhead Budget
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fr =SUM(F8:F35)
F36
D
SMALL WORLD ADVERTISING
Annual Overhead Budget
SMALL WORLD
ADVERTISING
A
B
E
1
2
3
For the Year 20×6
4
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Year
7 Support staff:
Receptionist
8,000 $ 32,000
17,500
10,000
7,250
17,100
40,000
30,000
$
8,000 $
17,500
10,000
7,250
17,100
40,000
30,000
8,000 $
17,500
10,000
7,250
17,100
40,000
30,000
8,000 $
17,500
10,000
7,250
17,100
40,000
30,000
9
Secretarial
70,000
40,000
29,000
68,400
160,000
120,000
10 Accounting
11
Custodial
Support staff benefits
13 Artistic supplies
14 Photographic supplies
15 Office:
12
Computer
17 Photocopying
Office supplies
19 Postage
20 Utilities:
5,000
3,750
4,500
525
16
5,000
5,000
3,750
4,500
5,000
20,000
15,000
18,000
2,100
3,750
4,500
3,750
4,500
525
18
525
525
3,250
4,000
3,250
4,000
Electricity
22 Heat/air conditioning
23 Internet access
24 Cable TV
25 Telephone
21
3,250
4,000
3,250
4,000
13,000
16,000
1,500
2,000
3,100
2,400
2,500
50,000
15,000
20,000
4,000
375
375
375
375
500
500
500
500
775
775
775
775
26
Trash collection
600
600
600
600
27
Other
625
625
625
625
12,500
3,750
5,000
1,000
12,500
3,750
5,000
1,000
28 Building rent
29 Insurance
12,500
3,750
5,000
1,000
12,500
3,750
30 Advertising
5,000
1,000
31 Vehicle maintenance
32 Depreciation
33 Equipment
3,000
5,000
3,000
5,000
3,000
5,000
3,000
5,000
5,000
12,000
20,000
34
Vehicles
35 Other
5,000
$189,000 $ 189,000 $ 189,000 $ 189,000 $ 756,000
5,000
5,000
20,000
36 Total overhead
27
Overhead Budget

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