Answer the Following Questions Using the Information Below

question 170

Multiple Choice

Answer the following questions using the information below:
A local accounting firm employs 20 full-time professionals. The budgeted annual compensation per employee is $40,500. The average chargeable time is 500 hours per client annually. All professional labor costs are included in a single direct-cost category and are allocated to jobs on a per-hour basis.
Other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $787,500, and the firm expects to have 90 clients during the coming year.
-If ten clients are lost and the workforce stays at 20 employees,then the direct labor cost rate per hour:

• A) $18.00 per hour
• B) $17.50 per hour
• C) $20.25 per hour
• D) $15.00 per hour