Luke employs 25 professional cleaners. Budgeted costs total $1,800,000 of which $1,050,000 is direct costs. Budgeted indirect costs are $750,000 and actual indirect costs were $793,800. Budgeted professional labor-hours are 1,000,000 and actual hours were 1,008,000. What is the budgeted direct cost-allocation rate?

Question

Quizplus · Accepted Answer

The budgeted direct cost-allocation rate can be calculated using the formula:

Budgeted direct cost-allocation rate = Total budgeted direct costs/Total budgeted professional labor-hours

Plugging in the values given in the problem, we get:

Budgeted direct cost-allocation rate = $1,050,000/1,000,000 = $1.05 per hour

Therefore, the correct answer is D.

Luke Employs 25 Professional Cleaners