Halo, Inc is a consulting firm that offers optimal legal solutions
It allocates indirect costs using a single predetermined overhead allocation rate with direct labor hours as the allocation base. The estimated indirect costs for this year amount to $120,000. The company is expected to work 6,000 direct labor hours during the year. The direct labor rate is $200 per hour. Clients are billed at 120% of direct labor cost. Last month, Halo's consultants spent 180 hours on Bloomington, Inc Calculate the total costs assigned to Bloomington.
A) $39,600
B) $36,000
C) $144,000
D) $3,600
Answer is A
Predetermined overhead allocation rate = Total estimated overhead costs / Total estimated quantity of the overhead allocation base = $120,000 / 6,000 direct labor hours = $20.00 per DL hour
Direct labor (180 hours x $200 ) $36,000
Indirect costs (180 hours x $20.00 ) 3,600
Total costs $39,600
You might also like to view...
What theories are categorized as firm-based theories? Which theories are categorized as country-based trade theories? What does each type of theory help explain?
What will be an ideal response?
Which of the following statements is FALSE?
A) Selection relates to the nature aspects of ability. B) Placement relates to the nature aspects of ability. C) Training relates to the nurture aspects of ability. D) Placement relates to the nurture aspects of ability.