Hearthstone,Inc. ,a home healthcare firm,has been using a single predetermined overhead allocation rate with direct labor hours as the allocation base to allocate overhead costs.The direct labor rate is $200 per hour.Clients are billed at 190% of direct labor cost.Sofi Acosta,the president of Hearthstone,decided to develop an ABC system to more accurately allocate the indirect costs.She identified two activities related to the total indirect costs-travel and information technology (IT)support.The other relevant details are given below:

The predetermined overhead allocation rate for travel will be ________.(Round your answer to the nearest cent. )

Question

Hearthstone,Inc. ,a home healthcare firm,has been using a single predetermined overhead allocation rate with direct labor hours as the allocation base to allocate overhead costs.The direct labor rate is $200 per hour.Clients are billed at 190% of direct labor cost.Sofi Acosta,the president of Hearthstone,decided to develop an ABC system to more accurately allocate the indirect costs.She identified two activities related to the total indirect costs-travel and information technology (IT) support.The other relevant details are given below:

The predetermined overhead allocation rate for travel will be ________.(Round your answer to the nearest cent. )

Quizplus · Accepted Answer

B)Predetermined overhead allocation rate = Total estimated overhead costs / Total estimated quantity of the overhead allocation base = $85,000/ 3000 miles = $28.33 per mile