P20-6A OneClick is a Web site design and consulting firm. The firm uses a job cost system,
Question:
P20-6A OneClick is a Web site design and consulting firm. The firm uses a job cost system, where each client is a different "job." OneClick traces direct labor, licensing costs, and travel costs directly to each job (client). 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 20X4. managing partner Lauren Pearle prepared the following budget: Direct labor hours (professional). Direct labor costs (professional) Support staff salaries Computer leases. Office supplies Office rent 6,000 hours $600,000 70.000 34,000 11,000 35,000 In November 20X4. OneClick served several clients. Records for two clients appear here: Planet Foods Deception Fragrances Direct labor hours. 675 hours 20 Hours Licensing costs $ 1,325 $125 Travel costs. $10,500 Required 1. Compute OneClick's predetermined indirect cost allocation rate for 20X4. 2. Compute the total cost of each job. 3. If Pearle wants to earn profits equal to 30% of sales revenue, how much (what total fee) should she charge each of these two clients? 4. Why does OneClick assign costs to jobs?
Step by Step Answer:
Accounting
ISBN: 9780130906991
5th Edition
Authors: Charles T. Horngren, Walter T. Harrison, Linda S. Bamber, Betsy Willis, Becky Jones