A company has a processing department with 10 stations. Because of the nature an

Question

A company has a processing department with 10 stations. Because of the nature and use of three of these stations, each is considered a separate cost center for IDC allocation. The remaining seven are grouped as one cost center, CC 190. Operating hours are used as the allocation basis for all stations. A total of $255,000 is allocated to the department for next year. Use the data collected this year to determine the indirect cost (IDC) rate for each center.

The IDC rate for CC 100 is $  per hour.

The IDC rate for CC 110 is $  per hour.

The IDC rate for CC 120 is $  per hour.

The IDC rate for CC 190 is $  per hour.

Cost Center IDC Allocated Operating Hours CC 100 $25,000 650 CC 110 $55,000 200 CC 120 $75,000 1200 CC 190 $100,000 1630

Explanation / Answer

IDC rate = IDC Allocated/Operating hours

The IDC rate for CC 100 is = 25,000/650

= $38.46 per hour

The IDC rate for CC 110 is = 55,000/200

= $275 per hour

The IDC rate for CC 120 is = 75,000/1200

= $62.5 per hour

The IDC rate for CC 190 is = 100,000/1630

= $61.35 per hour

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