Question

Sanborn Architectural Designs Inc. has three partners that each earn $80,000 per year, and three associates that earn $58,000 per year. Each partner and associate has 2,000 billable hours per year. Using an activity-based costing approach, if a partner worked 10 hours on a project, the amount of labor cost that should be billed to the project is:

Answer 1

Answer:

Overall rate will be 345

Explanation:

We have given that in Architectural Designs Inc there are three partners who earn $80000 each

So total earn of three partners = 3×$80000 = $240000

Amount earn by associates = $58000

So total amount ear by associates = 3×$58000 = $174000

So the total amount earn = $240000+$174000 = $414000

Total bailable hours = 2000×6 = 12000

So overall rate per hour

$=\frac{254000}{12000}=34.5$

Number of hours works on project = 10 hour

So the overall rate = 34.5×10 = 345