Question
8. Pelican Design is an interior design firm. The firm uses a job cost system in which each client is a different job. Pelican
8. Pelican Design is an interior design firm. The firm uses a job cost system in which each client is a different "job." Pelican Design 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 the current year, managing partner Melody Razadin prepared the following budget: 1(Click the icon to view the prepared budget.) Later that same year in November, Pelican Design served several clients. Records for two clients appear here: (Click the icon to view the records for two clients.) Read the requirements? Requirement 1. Compute Pelican Design's predetermined indirect cost allocation rate for the current year. Identify the formula, then compute the rate. (Enter the result as a whole number.) (1) (2) Predetermined indirect J= cost allocation rate Requirement 2. Compute the total cost of each of the two jobs listed. First enter in the direct costs for each job, then enter in the indirect costs and total cost for the jobs. (Complete all input fields. For accounts with no balance, make sure to enter "0" in the appropriate cell. Enter percentage amounts as a whole number. Round your answers to the nearest whole dollar.) Pelican Design Estimated Cost of Dining Treats and GoGreen.com Jobs Direct Costs: (3) (4) (5) Total Direct Costs Indirect Costs: hours x hours Dining Treats GoGreen.com Total Cost Requirement 3. If Pelican Design wants to earn profits equal to 40% of sales revenue, how much (what total fee) should the company charge each of these two dients? Identify the formula then determine the amount Pelican Design should charge these clients. (Round your answers to the nearest whole dollar) Dining Treats GoGreen.com (6) (7) = Fee charged %= %= Requirement 4. Why does Pelican Design assign costs to jobs? Pelican Design assigns costs to jobs to help the company (8). (9) also can help Pelican Design control costs. that cover all costs and contribute to profit. Assigning costs to 1: Data Table 2: Data Table Direct labor hours (professional) 8,000 hours Direct labor costs (professional). $ 1,000,000 Support staff salaries 80,000 Computer lease payments $ 46,000 Office supplies.. 25,000 Office rent.. $ 49,000 Dining Treats GoGreen.com Direct labor hours. 720 hours 60 hours Licensing costs. $ 2,600 $ 450 Travel costs $ 12,000 $ 0 3: Requirements 1. Compute Pelican Design's predetermined indirect cost allocation rate for the current year. 2. Compute the total cost of each of the two jobs listed. 3. If Pelican Design wants to earn profits equal to 40% of sales revenue, how much (what total fee) should the company charge each of these two clients? 4. Why does Pelican Design assign costs to jobs?
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