(L.OBJ. 1) Allocating indirect costs and computing income [10 min]
Antics, Inc., is a technology consulting firm focused on Web site development and integration of Internet business applications. The president of the company expects to incur $719,600 of indirect costs this year, and she expects her firm to work 8,000 direct labor hours. Antics’ systems consultants earn $350 per hour. Clients are billed at 150% of direct labor cost. Last month Antics’ consultants spent 100 hours on Crickett’s engagement.
Requirements
1. Compute Antics’ indirect cost allocation rate per direct labor hour.
2. Compute the total cost assigned to the Crickett engagement.
3. Compute the operating income from the Crickett engagement.
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