(L. OBJ. 5) Job order costing in a service company [20-25 min] Robin Design, Inc., is a...

(L. OBJ. 5) Job order costing in a service company [20-25 min]

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

At the beginning of 2011, managing partner Judi Jacquin prepared the following budget:

In November 2011, Robin Design served several clients. Records for two clients appear here:

Requirements

1. Compute Robin Design’s predetermined indirect cost allocation rate for 2011.

2. Compute the total cost of each job.

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

4. Why does Robin Design assign costs to jobs?