Rubio, Inc, a law consulting 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 $300 per hour. Clients are billed at 160% of direct labor cost. Chandler Massey, the president of Rubio, decided to develop an ABC system to more accurately allocate the indirect costs. He identified two activities related to the total indirect costs-travel and information technology (IT) support. The other relevant details are given below:
Activity Allocation base Estimated costs Estimated quantity
of allocation base
Travel Miles driven $85,000 1,500 miles
IT Support Direct labor hours 59,000 1,250 DLH
Total $144,000
The predetermined overhead allocation rate for travel will be ________. (Round your answer to the nearest cent.)
A) $47.20 per mile
B) $56.67 per mile
C) $68.00 per mile
D) $96.00 per mile
B .B) Predetermined overhead allocation rate = Total estimated overhead costs / Total estimated quantity of the overhead allocation base = $85,000/ 1,500 miles = $56.67 per mile
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Which of the following statements pertaining to the grace period and reinstatement provisions in health insurance policies is NOT correct?
A) Warren's medical expense policy was reinstated on September 30. He became ill and entered the hospital on October 5. His hospital expense will not be paid by the insurer. B) Under a health policy's reinstatement terms, insured losses from accidental injuries and sickness are covered immediately after reinstatement. C) Craig's health policy has a grace period of 31 days. He had a premium come due June 15 while he was on vacation. He returned home July 7 and mailed his premium the next day. His policy remained in force. D) States may require grace periods of 7, 10, or 31 days, depending on the mode of premium payment or term of insurance.
The portion of inventory or production NOT committed to customer orders is called:
A) free stock. B) excess production. C) available to promise. D) excess capacity. E) waste.