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Accounting
A service business estimates its direct labor costs to be $3,250,000 for the year. The estimated direct labor hours are 50,000. Overhead is allocated based on direct labor hours, and estimated overhead is $800,000 annually. The business desires a 60% markup. Calculate the following: 1. Direct labor rate per hour 2. Predetermined overhead allocation rate 3. Price per hour that it will charge its clients in order to earn the desired markup

A service business estimates its direct labor costs to be $3,250,000 for the year. The estimated direct labor hours are 50,000. Overhead is allocated based on direct labor hours, and estimated overhead is $800,000 annually. The business desires a 60% markup. Calculate the following: 1. Direct labor rate per hour 2. Predetermined overhead allocation rate 3. Price per hour that it will charge its clients in order to earn the desired markup

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A service business estimates its direct labor costs to be $3,250,000 for the year. The estimated direct labor hours are 50,000. Overhead is allocated based on direct labor hours, and estimated overhead is $800,000 annually. The business desires a 60% markup. Calculate the following: 1. Direct labor rate per hour 2. Predetermined overhead allocation rate 3. Price per hour that it will charge its clients in order to earn the desired markup
Transcribed Image Text:A service business estimates its direct labor costs to be $3,250,000 for the year. The estimated direct labor hours are 50,000. Overhead is allocated based on direct labor hours, and estimated overhead is $800,000 annually. The business desires a 60% markup. Calculate the following: 1. Direct labor rate per hour 2. Predetermined overhead allocation rate 3. Price per hour that it will charge its clients in order to earn the desired markup
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