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:

Benign Cyst

A non-cancerous sac-like structure filled with liquid or semisolid substance in the body.

Malignant Cyst

A growth that can potentially spread to other parts of the body and is characterized by cancerous cells.

Independent Events

Two or more events where the occurrence of one does not affect the probability of the occurrence of the other(s).

Diagnostic Test

A test used to identify a disease or condition in individuals, often based on specific markers, symptoms, or indicators.