accounting hmwk Compute Design's predetermined indirect cost allocation rate for 2011.

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 Design, Inc., is a web site design and consulting firm.  The firm uses a job order costing  
system, in which each client is a different job.  Widget Design traces direct labor, licensing costs,  
and travel costs directly to each job.  It allocates indirect costs to jobs based on a predetermined  
indirect cost allocation rate, computed as a percentage of direct labor costs.   
           
 At the beginning of 2011, managing partner Judi Johnson prepared the following budget:  
 Direct Labor Hours 10,000hours     
 Direct Labor Costs  $ 1,400,000       
 Support Staff Salaries $    170,000       
 Computer Leases  $      49,000       
 Office Supplies  $      29,000       
 Office Rent  $      60,000       
           
           
           
 In November 2011, Widget Design served several clients.  Records for two clients appear here:  
     Dining CoopRoot Chocolates  
 Direct labor hours  740 hours 65hours  
 Software licensing costs  $    2,100   $        300    
 Travel costs   $    9,000   $           -      
           
           
           
           
Deliverables         
           
1.  Compute Design's predetermined indirect cost allocation rate for 2011.  
2.  Compute the total cost of each job.      
3.  If Design's inc wants to earn profits equal to 20% of sales revenue, how much (what fee) should  
 it charge each of these two clients?      
4.  Why does Widget Design assign costs to jobs?     
           
Deliverable 1         
 The predetermined indirect cost allocation rate =     
           
          
HINT:Do this with a formula showing indirect costs to total direct labor costs   
           
           
Deliverable 2         
 First enter in the direct costs for each job.  Then enter in the indirect costs and total  
 costs for the jobs.        
 Make sure to enter "0" in the appropriate column.  Enter percentage amounts as a whole  
 number.  Round your answers to the nearest whole dollar.    
           
  Widget Design, Inc.    
  Estimated Cost of Dining Coop and Root Chocolates Jobs    
     Dining CoopRoot Chocolates    
  Direct Costs:       
   Direct labor      
           
           
  Software licensing costs      
  Travel        
  Total Direct Costs       
           
  Indirect Costs:       
      $           -        
       $           -       
  Total Cost  $           -    $           -       
           
           
Deliverable 3         
 Determine the amount Robin Design, Inc. should charge these clients.   
  (Round your answers to the nearest whole dollar.)    
           
 Dining Coop:        
           
 Root Chocolates:        
           
Deliverable 4         
 Widget Designs, Inc. assigns costs to jobs to help the company   
           
           
           
           
 Assigning costs to:         
           
           
           
           
           

 

    • 9 years ago
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