Dezire Travel Services provided the following information:
Direct labor rate: $80 per hour
Predetermined allocation rate for indirect costs: $18 per direct labor hour
If Dezire records revenue of $1,600 for a job requiring 10 hours of direct labor,then Dezire will make a profit of $800.

Question

Quizplus · Accepted Answer

To determine the profit, we need to calculate the total cost first:
Direct labor cost = 10 hours x $80 per hour = $800
Allocated indirect costs = 10 hours x $18 per hour = $180
Total cost = $800 + $180 = $980
Profit = Revenue - Total cost = $1,600 - $980 = $620
Therefore, the profit would be $620, not $800 as stated in the given information. Thus, the answer is B (False).

Dezire Travel Services Provided the Following Information