Question

Dove Design, Inc. is a Web site design and consulting firm. The firm uses a job order costing system in which each client Al the beginning of 2018, managing partner Holly Harrison prepared the following budget estimates (Click the icon to view the prepared budget.) indirect costs to iobs based on a predelermined overhead allocation rate, computed as a percentage of direct labor costs In November 2018, Dove Design served several clients. Repords for two clients appear here: Read erecuirements E(Click the icon to view the records for two clients.) Requirement 1. Compute Dove Design's direct labor rate and its predetemined overhead allocation rate for 2018. (Abbreviation used: OH overhead.) X Begin with the direct labor rato. Data Table Direct labor rate per hour Yummy Treats Martinez Chocolates Compute Dove Design's predetermined overhead cost allocation rate for 2018 Direct labor hours 1,000 hours 200 hours Predetermined OH cost allocation rate Software licensing costs 5,000 100 6,000 Travel costs Compule the total cost of each job. Requirement First, enter the direct oosts 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 Dove Design, Inc. Estimated Cost Yummy Treats and Martinez Chocolates Jobs Martinez Data Table Yummy Treats Chocolates Direct Costs: Direct labor hours (professionals) 8,000 hours hrs. x Direct labor costs (professionals) 2,400,000 hrs. x 354,000 Support staff salaries Computer leases 41,000 Office supplies 22,000 Total Direct Costs Office rent 63.000 Allocated Indirect Costs: Print Done Total Costs Requirement 3. If Harison wants to eam profits equal to 30 % of service revenue, what fee should she charge each of these two clients? S Yummy Treats Martinez Chocolates Requirement 4.Why does Dove Design assign costs to jobs? also can help Dove Design control oosts. that cover all costs and contribute to profit. Assigning costs to Dove Design assigns costs to jobs to help the company

Answer 1

1)

Estimated direct labor costs	/	Estimated direct labor hours	=	Direct labor rate
$                             2,400,000.00	/	8,000.00	=	$                 300.00

Estimated OH Costs	/	Estimated direct labor costs	=	Predetermined OH cost allocation rate
$                                 480,000.00	/	2,400,000.00	=	20%

2)

Bluebird Design, Inc.
Estimated Cost of Yummy Treats and Martinez Chocolates Jobs
	Yummy Treats	Martinez Chocolates
Direct Costs
Direct Labor
1,000 Hrs x 300	$            300,000.00
200 Hrs x 300		$                    60,000.00
Software licensing costs	$                 5,000.00	$                          100.00
Travel costs	$                 6,000.00	$                                    -
Total Direct Costs	$            311,000.00	$                    60,100.00
Allocated Indirect Costs:
20% x 300,000	$              60,000.00
20% x 60,000		$                    12,000.00
Total Costs	$            311,000.00	$                    72,100.00

3)

Yummy Treats	$ 404,300.00
Martinez Chocolates	$    93,730.00

4) Dove Design Assigns costs to jobs to help the company Set fees that cover all costs and contribute to Profit. Assigning Costs to individual clients also can help Dove design control costs