# Accounting hmwk compute design’s predetermined indirect cost

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   10,000 hours             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 Coop Root Chocolates       Direct labor hours     740 hours   65 hours       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 Coop Root 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:

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