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 direct labour hours as the allocation base?
A)$384.00
B)$7.68
C)$18.00
D)$19.00
E)$138.89

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 direct labour hours as the allocation base?
A)$384.00 
B)$7.68 
C)$18.00 
D)$19.00 
E)$138.89

Quizplus · Accepted Answer

The question asks for the actual indirect cost rate using direct labour hours as the allocation base, therefore we need to use the formula: Actual indirect cost rate = Total indirect costs ÷ Total direct labour hours. From the data given, we can see that the total indirect costs are $288,000 and the total direct labour hours are 16,000. Therefore, the actual indirect cost rate is $288,000 ÷ 16,000 = $18.00 per direct labour hour. The correct answer is C.

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