Consider the budget information for Bert and Ernie Design firm: Professional labor $1,000,000 Administrative labor 200,000 Lease

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Question:

Consider the budget information for Bert and Ernie Design firm:

Professional labor $1,000,000

Administrative labor 200,000

Lease expense 50,000

Design equipment depreciation 25,000

Samples and books 10,000

Utilities 20,000

Professional hours 100,000 hours

Number of rooms redone 2,000 rooms

Bert and Ernie decide there are two cost pools, design support, which is assigned to jobs based on the number of rooms redone, and facilities costs, which is assigned to jobs based on the number of professional labor hours. The design support cost pool includes design equipment depreciation and samples and books. The lease expense and utilities are considered facilities costs. What is the budgeted rate per cost driver for facilities costs?

a. $17.50

b. $1.05

c. $.70

d. $37.50