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From the below problem, on requirement 3. Why do we calculate by 80% instead of 20%? Cardinal Design is an interior design firm. The firm
From the below problem, on requirement 3. Why do we calculate by 80% instead of 20%?
Cardinal Design is an interior design firm. The firm uses a job cost system in which each client is a different "job." Cardinal 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: (Click the icon to view the prepared budget.) Later that same year in November, Cardinal Design served several clients. Records for two clients appear here: (Click the icon to view the records for two clients.) Read the Requirement 1. Compute Cardinal 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.) Requirement 2. Compute the total cost of each of the two jobs listed. the nearest whole dollar.) Data table Data table f Cardinal Design wants to earn profits equal to 20% of sales revenue, how much (what total fee) should the company charge each of these two clients? Identify the formula then determine the amount Cardinal Design should charge these clients. (Round your answers to the nearest whole dollar.)Step by Step Solution
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