Answer:
Instructions are listed below.
Explanation:
Giving the following information:
In December 2016, Ashton budgeted 2017 assembly-support costs to be $8,300,000 and 2017 direct labor-hours to be 166,000.
With this information, we can calculate the budgeted indirect cost rate. <u>However, we can't calculate the actual indirect cost rate. I will provide the formula for both and a small example of the actual indirect cost rate.</u>
To calculate the budgeted indirect cost rate, we need to use the following formula:
Budgeted indirect cost rate= total estimated indirect costs for the period/ total amount of allocation base
Budgeted indirect cost rate= 8,300,000/166,000= $50 per direct labor hour.
Let's suppose that actual indirect cost was of 8,000,000 and actual direct labor hours of 175,000:
Actual indirect cost rate= total actual indirect costs for the period/ total amount of allocation base
Actual indirect cost rate= 8,000,000/175,000= $45.71 per direct labor hour
