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   $           –


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:            &nbp;

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