Question

Accounting Services expects its accountants to work a total of 27 comma 000 direct labor hours per year. The​ company's estimated total indirect costs are $ 270 comma 000. The company uses direct labor hours as the allocation base for indirect costs. What is the indirect cost allocation​ rate?

Answer 1

Answer:

$10 per hour

Explanation:

Data provided in the question

Direct labor hours per year = 27,000

Total indirect cost = $270,000

So, by considering the above formation, the indirect cost allocation rate is

= Total indirect cost ÷ Direct labor hours per year

= $270,000 ÷ 27,000

= $10 per hour

By dividing the total indirect cost by the direct labor hours we can get the indirect cost allocation​ rate