Port Accounting Performs Two Types of Services, Audit and Tax

question 8

Multiple Choice

Port Accounting performs two types of services, audit and tax.Port's overhead costs consist of computer support, $240,000; and legal support, $120,000.Information on the two services is: $$\begin{array} { l l l } &\underline{ \text { Audit } }&\underline { \text { Tax } } \\\text { Direct labour cost } & \$ 50,000& \$ 100,000 \\\text { CPU minutes } & 40,000 & 10,000 \\\text { Legal hours used } & 200 & 800\end{array}$$ Overhead applied to audit services using ABC is

• A)$120,000.
• B)$144,000.
• C)$216,000.
• D)$240,000.

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Definitions:

Compensating Balance

A compensating balance is a minimum account balance that a borrower agrees to maintain in an account with a lender as part of a loan agreement.

Footnotes

Notes at the bottom of financial statements that provide additional details and clarifications about the financial data presented, offering insights into accounting policies and specific line items.

Cash Control

Includes the methods and procedures that are implemented to monitor, manage, and protect the company's cash transactions and balances.

Safeguarding Cash

Implementing measures and controls to protect cash assets from theft, fraud, or misuse.