Bar None Legal Services,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 $170,000.The company is expected to work 17,000 direct labor hours during the year.The direct labor rate is $200 per hour.Clients are billed at 130% of direct labor cost.Last month,Bar None's consultants spent 180 hours on Henderson,Inc.Calculate the total costs assigned and allocated to Henderson.
A)$37,800
B)$36,000
C)$189,000
D)$9000

Question

Quizplus · Accepted Answer

The total costs assigned and allocated to Henderson include direct labor costs and allocated indirect costs. Direct labor costs are 180 hours * $200/hour = $36,000. The overhead rate is $170,000 / 17,000 hours = $10/hour. Allocated indirect costs are 180 hours * $10/hour = $1,800. Total costs = $36,000 + $1,800 = $37,800.