Dunby,Inc.is a consulting firm that offers optimal legal solutions.It allocates indirect costs using a single predetermined overhead allocation rate with direct labor hours as the allocation base.The estimated indirect costs for this year amount to $160,000.The company is expected to work 6,000 direct labor hours during the year.The direct labor rate is $200 per hour.Clients are billed at 120% of direct labor cost.Last month,Dunby's consultants spent 170 hours on Xyme,Inc.What is the predetermined overhead allocation rate per direct labor hour?
A)$800 per hour
B)$27 per hour
C)$941 per hour
D)$30 per hour

Question

Quizplus · Accepted Answer

B)Predetermined overhead allocation rate = Total estimated overhead costs / Total estimated quantity of the overhead allocation base = $160,000 / 6,000 direct labor hours = $27 per DL hour

Dunby,IncIs a Consulting Firm That Offers Optimal Legal Solutions