Answer the following questions using the information below:
Rhett Company has two departments, Machining and Assembly. The following estimates are for the coming year:

-A single indirect-cost rate based on direct manufacturing labor-hours for the entire plant is:
A)$ 8 per direct labor-hour
B)$10 per direct labor-hour
C)$20 per direct labor-hour
D)None of these answers is correct.

Question

Answer the following questions using the information below:
Rhett Company has two departments, Machining and Assembly. The following estimates are for the coming year:
 
-A single indirect-cost rate based on direct manufacturing labor-hours for the entire plant is:
A)$ 8 per direct labor-hour 
B)$10 per direct labor-hour 
C)$20 per direct labor-hour 
D)None of these answers is correct.

Quizplus · Accepted Answer

The question provides an indirect-cost rate based on direct manufacturing labor-hours for the entire plant, which is $10 per direct labor-hour. However, there is no information on how the indirect costs should be allocated between the two departments. Therefore, it is reasonable to assume that the same indirect-cost rate applies to both departments, and the best choice is B.

Answer the Following Questions Using the Information Below