Question

skylark design, inc is a web site design and consulting firm

Skylark Design, Inc. is a Web site design and consulting firm. The firm uses a order costing system in which each client is a different job. Skylark 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. At the beginning of 2018, managing partner Erica Delough pr budget estimates: (Click the icon to view the prepared budget) In November 2018, Skylark Design served several clients. Re job appear here: Read the requirements (Click the icon to view the records for two clients) Requirement 1. Compute Skylark Design's direct labor rate and its predetermined overhead allocation rate for 2018. (Abbreviation used OH ove Begin with the direct labor rate. Estimated direct labor hours Direct labor rate Estimated direct labor costs $ 288 6,250 per hour S 1,800,000 Compute Skylark Design's predetermined overhead cost allocation rate for 2018. Predetermined OH cost allocation rate Estimated direct labor costs Estimated OH costs 40 % 1.800,000 S 720,000 S

Answer 1

A B D 1 Requirement 1 Estimated direct labor costs/ Estimated direct labor hours Direct labor rate 2 = 3 6,250 $ 18,00,000 288 4 Estimated OH Costs/ 5 Estimated Direct Labor Costs Predetermined OH cost allocation rate 7,20,000 $ 40% 18,00,000 7

1 Maynard Food Place Chocolates 2 3 Direct Costs 4 Direct Labor 5 900 hrs $288 per hour $ 2,59,200 6 500 hrs $288 per hour 7 Software licensing costs $ $1,44,000 4,500 $ 8,000 $ $2,71,700 $1,44,400 400 8 Travel Costs 9 Total Direct Costs 10 Allocated indirect costs 11 40% $2,59,200 12 40% $1,44,000 13 Total Costs $1,03,680 * * 57,600 $3,75,380 $2,02,000