Use the information below to answer the following question(s).The following data were taken from the records of Big Sky Ltd., a manufacturing company.The company has been calculating the actual indirect cost allocation rate using direct labour hours as the allocation base.
-What is the actual indirect cost rate at Big Sky Ltd.using machine hours as the allocation base?
A)$60.67
B)$10.67
C)$7.89
D)$4.05
E)$3.84

Question

Use the information below to answer the following question(s).The following data were taken from the records of Big Sky Ltd., a manufacturing company.The company has been calculating the actual indirect cost allocation rate using direct labour hours as the allocation base. 
-What is the actual indirect cost rate at Big Sky Ltd.using machine hours as the allocation base?
A)$60.67 
B)$10.67 
C)$7.89 
D)$4.05 
E)$3.84

Quizplus · Accepted Answer

The actual indirect cost allocation rate using direct labour hours as the allocation base is $46.74 per hour. We can use this information to calculate the actual indirect cost allocation rate using machine hours as the allocation base:
Actual Indirect Cost Rate = (Indirect Costs / Machine Hours)
= ($1,405,200 / 366,000)
= $3.84 per hour
Therefore, the best choice is E, as it is the actual indirect cost rate when machine hours are used as the allocation base.

Use the Information Below to Answer the Following Question(s)