Dunby Inc.is a consulting firm that offers optimal legal solutions.It allocates indirect costs using a single plantwide rate with direct labor hours as the allocation base.The estimated indirect costs for this year amount to $150,000.The company is expected to work for 5,000 direct labor hours during the year.The direct labor rate is $250 per hour.Clients are billed at 140% of direct labor cost.Last month,Dunby's consultants spent 175 hours on Xyme Inc.Calculate the total cost assigned to Xyme.
A)$49,000
B)$43,750
C)$38,500
D)$61,250

Question

Quizplus · Accepted Answer

Indirect cost rate = $150,000/5,000 DLH = $30 per DLHTotal cost assigned to Xyme = (175 DLH * $250 DLH rate) + (175 DLH * $30 indirect cost rate)= $43,750 + $5,250= $49,000

Dunby IncIs a Consulting Firm That Offers Optimal Legal Solutions