Bluebird 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.

Bluebird 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 2009, managing partner Judi Jacquin prepared the following budget:

In November 2009, Bluebird Design served several clients. Records for two clients appear here:

Requirements 

1. Compute Bluebird Design's predetermined indirect cost allocation rate for 2009.

2. Compute the total cost of each job.

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

4. Why does Bluebird Design assign costs to jobs? 

Transcribed Image Text:

Direct labor hours (professional)...... Direct labor costs (professional).......... Support staff salaries............. Computer leases......... Office supplies........ Office rent...... 6,250 hours $1,000,000 120,000 45,000 25,000 60,000