Question

Blake Accounting pays Peter Geller $99,000 per year. Assume that Blake's accountants are expected to work a total of 12,000 direct labor hours in 2018. Blake's estimated total indirect costs are $384,000 and the allocation base used is direct labor hours. Read the requirements. Requirement 1. What is Blake's predetermined overhead allocation rate? Predetermined overhead allocation rate Requirement 2. What indirect costs will be allocated to Client 507 if Peter Geller, an accountant at Blake Accounting, works 10 hours to prepare the financial statements? x Indirect costs allocated х Requirements 1. What is Blake's predetermined overhead allocation rate? 2. What indirect costs will be allocated to Client 507 if Peter Geller, an accountant at Blake Accounting, works 10 hours to prepare the financial statements? Print Done

Answer 1

	Blake Accounting
Requirement 1)
	Formula:--
	Predermined Overhead allocation rate=Total estimated Indirect cost/Total estimated Direct labor hours
	Total estimated Indirect cost=(A)	$                                   3,84,000.00
	Total estimated Direct Labor Hours=(B)	12000
	Total estimated Indirect Cost/	Total Estimated Direct Labor Hours
	$384000/	12000
	Predermined Overhead allocation rate=(A)/(B)	$                                               32.00	per direct labor hours
Requirement 2)	Indirect cost allocated to Client 507=Total hours worked on Job 507* Predermined Overhead rate
	Total Hours worked on Job 507=(A)	10
	Predermined Overhead Rate=(B)	$                                               32.00
	Total Hours worked on Job 507*	Predermined overhead rate
	10Hours*$32 per direct labor hours=	$                                            320.00
	Indirect cost allocated to Client 507=(A)*(B)	$                                            320.00