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Budgeted rate

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L & L, CPAs, employs two full-time professional CPAs and five other accountants. Budgeted direct salary costs include $150,000 for each CPA and $40,000 per other accountant. For 2007 year, indirect costs were budgeted at $200,000, but actually amounted to $225,000. Actual salaries were $155,000 for each CPA and $45,000 for each accountant. Direct and indirect costs are applied on a labor-hour basis. Total budgeted labor-hours were 5,000. If a client used 500 labor-hours, what are the budgeted direct-cost rate and the budgeted indirect cost rate, respectively?

$100; $45.
$100; $40.
$ 90; $40.
$110; $40.
$107; $45

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Solution Summary

The solution explains how to calculate the budgeted direct-cost rate and budgeted indirect cost rate

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Budgeted direct cost rate = Budgeted Direct costs/Budgeted labor hours
Budgeted direct cost = 150,000X2 = 300,000 for CPA + ...

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