Question

Pelican Design, Inc. is a Web site design and consulting firm. The firm uses a job order costing system in which each At the beginning of 2018, managing partner Abby Bickers prepared the following budget estimates: client is a different job. Pelican Design assigns direct labor, licensing costs, and travel costs directly to each job. It B(Click the icon to view the prepared budget.) allocates indirect costs to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct In November 2018, Pelican Design served several clients. Records for two clients appear here: labor costs. B (Click the icon to view the records for two clients.) Read the requirements Requirement 1. Compute Pelican Design's direct labor rate and its predetermined overhead allocation rate for 2018. (Abbreviation used: OH = overhead.) Begin with the direct labor rate. Estimated direct labor Estimated direct labor Direct labor costs hours = rate Data Table per 1,900,000 10.000 hour Martin Compute Pelican Design's predetermined overhead cost allocation rate for 2018, Food Place Chocolates Estimated direct labor Predetermined OH cost Direct labor hours 1,000 hours 500 hours Estimated OH costs costs allocation rate Software licensing 380,000 2 1 ,900,000 = costs $ 4,000 $ 500 Travel costs 10,000 0 Requirement 2. Compute the total cost of each job. First, enter the direct costs for each job. Then enter in the indirect costs and compute the total cost for each job. (Enter a '0" for any zero balances.) Print Done Pelican Design, Inc. Estimated Cost of Food Place and Martin Chocolates Jobs Martin Food Place Chocolates Direct 0 Data Table Costs: Direct labor Direct labor hours (professionals) 10,000 hours Direct labor costs 500 * (professionals) $1,900,000 Support staff salaries 624,000 Computer leases 46,000 Office supplies 27,000 Total Direct Costs Ollice rent 63.000 Allocated Indirect Costs: % x Print Done 800 Total Costs Requirement 3. If Bickers wants to earn profits equal to 20% of service revenue, what fee should she charge each of these two clients? Food Place Martin Chocolates $ Requirement 4. Why does Pelican Design assign costs to jobs? Pelican Design assigns costs to jobs to help the company V that cover all costs and contribute to profit. Assigning costs to also can help Pelican Design control costs.

Answer 1

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Solohon: rate and its predorten compute overhead pelican rate Design's allocation direct labor for 2018? a $ Hourly rate to the employer 1900000 per year - 10000 hours per year - 9190 per hour predetermined Allocation overhead Rate Tocal estimated overhead costs Totat estimated quantity of the overhead allocation base $ 760 000 * = $0.40 = 401. of dorear labor cost 1900 000 760000 A I 624000 + $ 46000 + $ 27000 + & 63000 - Soral cost For pelican Design Inc of Food place and Martin chocolates Jobs the Month of November Food place Martin Chocdates particulars Direct costs: Direct labor : $ 190000 191000 1000 hours & 190 Perhour Too hours x 190 per hour I 4000 $ 10000 & 500 40 9Қоо $ 204000 Software licesing costs. gravel cost Total Dirat costs Allocated Indirect costs: 401 & 190000 (direct labor cost) 409.9 950oo ( ) Total costs & 76000 & 38000 280000 1133500

0 If Bickers want to earn the -Profits Protifs charge equal equal to 20t to 20t. of Service revenue, each of these two clients ? What fee Should costs are lot of sales It profits are not of sales, then total - Total costs . Sales Revenue B01 food place : $35.000 service Revenue & Total costs por- service Revenue = $ 280000 801. : service Revenue = $350.00 Martin Chocolates & 166875 service Revenue - Coral costs 1801 service Revenue - $133500 1801- service Revenue - 4 166875 6 why does perican costs to jobs 2 Design assign * Pelican the company contribute to clients can Design Inc. assigns costs to jobs to help set fees that cover all costs and profit. Assigning costs to Individual also help pelican design anc. control costs.