Use the Information Below to Answer the Following Question(s)

question 122

Multiple Choice

Use the information below to answer the following question(s) .A dental office is in the process of changing their costing system.Their system currently uses a single direct cost pool (professional labour) and a single indirect cost pool (staff support) .The direct categories in the new, refined costing system include:
1.Professional partner labour.Average total annual compensation of the two partners is $100,000; and, each partner has 2,000 hours of budgeted billable time.2.Dental assistant labour.Average total annual compensation of the four assistants is $22,500 each, and each assistant has 2,000 hours of budgeted billable time.3.Office staff.Average total annual compensation of the two staff members is $15,000 each, and each has 2,000 hours of budgeted billable time.The indirect category in the new refined costing system includes professional liability insurance.The budgeted indirect amount is $200,000, and the allocation base is budgeted professional labour hours.The dentist and dental assistants are considered professional labour hours.
-What would be the percentage change in the budgeted direct cost rate if they consider hiring one more employee, as part of the office staff?

• A)3.0%
• B)2.0%
• C)1.0%
• D)0.5%
• E)0%

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Definitions:

Parol Evidence Rule

A principle that courts will not permit outside evidence to contradict clear wording of a contract.

Extrinsic Evidence

Evidence not contained in the document itself but that may be used to interpret, clarify, or add context to the document.

Express Terms

Specific conditions and obligations explicitly stated and agreed upon by the parties in a contract.

Non Est Factum

A defense in contract law that the person signing the document did not understand its nature due to a significant mistake.