Hearthstone,Inc The Predetermined Overhead Allocation Rate for Travel Will Be ________

question 72

Multiple Choice

Hearthstone,Inc.,a home healthcare 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 $200 per hour.Clients are billed at 190% of direct labor cost.Sofi Acosta,the president of Hearthstone,decided to develop an ABC system to more accurately allocate the indirect costs.She identified two activities related to the total indirect costs-travel and information technology (IT) support.The other relevant details are given below: $$\begin{array} { | l | l | l | l | } \hline \text { Activity } & \text { Allocation base } & \text { Estimated costs } & \begin{array} { l } \text { Estimated quantity } \\\text { of allocation base }\end{array} \\\hline \text { Travel } & \text { Miles driven } & \$ 85,000 & 3000 \text { miles } \\\hline \text { IT Support } & \text { Direct labor hours } & \underline{60,000} & 1300 \mathrm {~ DLH } \\\hline \text { Total } & & \underline{\$ 145,000} & \\\hline\end{array}$$ The predetermined overhead allocation rate for travel will be ________.(Round your answer to the nearest cent.)

• A)$46.15 per mile
• B)$28.33 per mile
• C)$65.38 per mile
• D)$48.33 per mile

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A measure of the utility or enjoyment a consumer receives from a product or service relative to its cost.

Market Entry And Exit

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Profits And Losses

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