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3 / 6 Question 2 A + 71% 20 MARKS Green Technology.com (GT) is an Internet advertising agency. The firm uses job cost system

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3 / 6 Question 2 A + 71% 20 MARKS Green Technology.com (GT) is an Internet advertising agency. The firm uses job cost system in which each client is a different "job". GT traces direct labour, software licensing costs, and travel costs directly to each job. The company allocates indirect costs to jobs based on a predetermined indirect costs allocation rate computed direct labour hour. At the beginning of the current year, managing partner Ricky prepared a budget: Direct labour hours (professional) Direct labour costs (professional) Support staff salaries Rent and utilities Suppliers Lease payments on computer hardware 8,000 hours $1,600,000 190,000 41,000 23,000 66,000 During January of the current year, GT company served several clients. Records for two clients appear here: Direct labour hours All Vacations.com 760 hours Golden Vacations.com 50 hours Software licencing costs Travel costs $2,000 $9,000 $150 $0 Requirements: a. Compute predetermine indirect cost allocation rate for the current year based on direct labour hours. b. Compute indirect costs absorbed into each of each job. c. Compute the total cost of each job. (4 MARKS) (2 MARKS) (12 MARKS) d. If company wants to earn profits equal to 20 percent of sales revenue, determine selling price should it charge of these two clients. (2 MARKS)

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