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

question 6

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 is the budgeted indirect cost allocation rate per unit of the allocation base for the professional liability insurance?

• A)$16.67
• B)$25.00
• C)$1.67
• D)$26.67
• E)$12.50

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Definitions:

Optimal Health

A state of complete physical, mental, and social well-being, not just the absence of disease or infirmity.

Security Alarms

Devices or systems designed to detect unauthorized entry or activities in buildings, homes, or other areas.

House Break-Ins

Criminal acts where an individual unlawfully enters a residence with the intent of committing an offense, typically theft.

Ego-Involving

Tasks or situations that affect one's self-esteem or self-image.