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Information relating to Driver Inc. follows: (Click the icon to view the company's information.) 1. Compute Driver's indirect cost allocation rate. 2. Compute the
Information relating to Driver Inc. follows: (Click the icon to view the company's information.) 1. Compute Driver's indirect cost allocation rate. 2. Compute the total costs assigned to the Sovak and Cordaro engagements. 3. Compute the operating income from the Sovak and Cordaro engagements. More info Requirement 1. Compute Driver's indirect cost allocation rate. First identify the formula used to compute the indirect cost allocation rate, then compute the rate. (Round your answer to two decimal places.) Indirect cost allocation rate (per hr) = Requirement 2. Compute the total costs assigned to the Sovak and Cordaro engagements. (Round your answers to the nearest whole dollar.) Sovak Total costs Cordaro Requirement 3. Compute the operating income from the Sovak and Cordaro engagements. (Round your answers to the nearest whole dollar.) Sovak Cordaro Driver Inc. is a technology consulting firm focused on website development and integration of internet business applications. President Holly Miner's ear is ringing after an unpleasant call from client Jackson Sovak. Sovak was irate after opening his bill for Driver's redesign of his company's website. Sovak said that Driver's major competitor, Alpha Applications, charged much lower fees to another company for which Sovak serves on the board of directors. Miner is puzzled for two reasons. First, she is confident that her firm knows website design and support as well as any of Driver's competitors. Miner cannot understand how Alpha Applications can undercut Driver's rates and still make a profit. But Alpha Applications is reputed to be very profitable. Second, just yesterday Miner received a call from client Stan Cordaro. Cordaro was happy with the excellent service and reasonable fees Miner charged him for adding a database-driven job-posting feature to his company's website. Miner was surprised by Cordaro's compliments because this was an unusual job for Driver that required development of complex database management and control applications, and she had felt a little uneasy accepting it. Like most consulting firms, Driver traces direct labour to individual engagements (jobs). Driver allocated indirect costs to engagements using a budgeted rate based on direct labour hours. Miner is happy with this system, which she has used since she established Driver in 1995. Miner expects to incur $714,000 of indirect costs this year, and she expects her firm to work 5,300 direct labour hours. Miner and the other systems consultants eam S355 per hour. Clients are billed at 190% of direct labour cost. Last month, Driver's consultants spent 135 hours on Sovak's engagement. They also spent 135 hours on Cordaro's engagement. Less: Operating income - X
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