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Marsha Design is an interior design and consulting firm. The firm uses a job order cost system in which each client represents an individual job.
Marsha Design is an interior design and consulting firm. The firm uses a job order cost system in which each client represents an individual job. Marsha Design traces direct labor and travel costs to each job (client). It assigns Indirect costs to clients at a predetermined overhead rate based on direct labor hours. At the beginning of the year, the managing partner, Marsha Cain, prepared the following budget: 5,500 hours $550,000 Direct labor hours (professional) Direct labor costs professional) Indirect costs: Support staf salaries office rent office supplies Total expected indirect costs $ 80,000 60,000 25,000 $165,000 Later that same year, in March, Marsha Design served several clients. Records for two clients appear below: Direct labor cost (professional) Travel costs Direct labor hours Oliverio $4,500 700 45 hours MoComb $3,500 300 35 hours Required: 1. Compute Marsha Design's pledetermined overhead rate for the current year. 3. Assume that Marsha charges clients $200 per hour for interior design services. How much gross profit would she earn on each of the clients above, ignoring any difference between actual and applied overhead? Complete this question by entering your answers in the tabs below
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