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Hearthstone, Inc., a home healthcare firm, has been using a single predetermined overhead allocation rate with direct labor hours as the allocation base to allocate
Hearthstone, Inc., a home healthcare firm, has been using a single predetermined overhead allocation rate with direct labor hours as the allocation base to allocate overhead costs. The direct labor rate is $250 per hour. Clients are billed at 170% of direct labor cost. Sofi Acosta, the president of Hearthstone, decided to develop an ABC system to more accurately allocate the indirect costs. She identified two activities related to the total indirect coststravel and information technology (IT) support. The other relevant details are given below: Activity Travel IT Support Total Allocation base Miles driven Direct labor hours Estimated costs $73,000 56,000 $129,000 Estimated quantity of allocation base 4,000 miles 1,150 DLH The predetermined overhead allocation rate for travel will be _ _. (Round your answer to the nearest cent.) O A. $48.70 per mile O B. $18.25 per mile O C. $63.48 per mile OD. $32.25 per mile
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