Dora Travel Services provided the following information:
Cost allocation rate for direct labor: $80 per hour
Cost allocation rate for indirect costs: $15 per direct labor hour
If Dora receives $1,600 for a job requiring 8 hours of direct labor, then Dora will make a profit of $440.

Question

Quizplus · Accepted Answer

To find the total cost of the job:
Direct labor cost = 8 hours x $80 per hour = $640
Indirect cost = 8 hours x $15 per hour = $120
Total cost = $640 + $120 = $760
To find the profit:
Profit = Revenue - Total Cost
$1,600 - $760 = $840
Therefore, the profit is actually $840, not $440. Therefore, the answer is false.

Dora Travel Services Provided the Following Information