Question

Hummingbird 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. Hummingbird Design assigns direct labor, licensing costs, and travel costs directly to each job. It allocates indirect costs to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs.

Read the Requirements

1.) Compute Hummingbird Design's direct labor rate and its predetermined overhead allocation rate for 2018.

2.) Compute the total cost of each job.

3.) If Eaton wants to earn profits equal to 20% of service revenue, what fee should she charge each of these two clients?

4.) Why does Hummingbird Design assign costs to Jobs?

Answer 1

2)

	Tasty coop	martinez chocolates
Direct cost
Labor cost
1000*210	210000
300*210		63000
Software licensing cost	2000	500
Travel cost	9000	0
Total direct cost	221000	63500

	Tasty coop	martinez chocolates
Direct cost	221000	63500
Indirect cost	42000. (210000*.20)	12600. (63000*.20)
Total cost	263000	76100