Della Company employs two professional appraisers, each having a different specialty. Scott specializes in commercial appraisals, and Burt specializes in residential appraisals. The company expects total overhead costs of $360,000 during the year.
The salaries and billable hours of the two appraisers are expected to be as follows:
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Expected Salary
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Expected Hours
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Scott
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$100,000
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2,500 hours
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Burt
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$80,000
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2,000 hours
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Compute the overhead cost rate that should be used for each of the appraisers (based on the expected hours to be billed, with overhead cost rates varying in proportion to each appraiser's compensation) to ensure that the total expected operating costs for the year will be recovered from clients.
a. Scott, $80.00 per hour; Burt, $80.00 per hour
b. Scott, $32.00 per hour; Burt, $48.00 per hour
c. Scott, $200.00 per hour; Burt, $160.00 per hour
d. Scott, $100.00 per hour; Burt, $80.00 per hour
e. Scott, $50.00 per hour; Burt, $30.00 per hour
f. Scott, $40.00 per hour; Burt, $40.00 per hour