Answer the Following Questions Using the Information Below

question 192

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.
-What is the budgeted indirect-cost rate per hour?

• A) $1,575.00 per hour
• B) $78.75 per hour
• C) $18.00 per hour
• D) $17.50 per hour

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Definitions:

Years

Units of time equal to 365 days (or 366 days in leap years), used as a basic measure of time for planning and agreements.

Risk Premium

The additional return expected for holding a risky investment over a risk-free one.

Long Bonds

Bonds with a long duration, typically more than ten years, that are subject to higher interest rate risks but potentially offer higher yields.

Period

A length of time during which a series of events or an action takes place or is completed.