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

question 109

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 direct cost rate per hour for office staff?

• A)$11.250 per hour
• B)$9.625 per hour
• C)$7.500 per hour
• D)$6.875 per hour
• E)$6.125 per hour

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