Mike & Tracy is an advertising agency. The firm uses a job cost system in which each client is a different$$ "job." Mike & Tracy traces direct$$ labor, software licensing$$ costs, and travel costs directly to each job$($client$).$ The company allocates indirect costs to jobs based on a predetermined indirect cost allocation rate based on direct labor hours

At the beginning of the current$$ year, managing partner Joe Allota prepared a$$ budget:

Direct labor hours $($professional$)........$

$17,700$ hours

Direct labor costs $($professional$).........$

$$1,593,000$

Support staff salaries. $.................$

$$200,000$

Rent and utilities. $.....................$

$$49,000$

Supplies. $............................$

$$381,300$

Lease payments on computer hardware. $.$

$$60,000$

During January of the current$$ year, Mike & Tracy served several clients. Records for two clients appear$$ here:

Drifter.com Port Albany Golf Resort

Direct labor hours. $........$

$780$ hours $40$ hours

Software licensing costs. $..$

$$2,700$ $$500$

Travel costs. $.............$

$$9,000$ $$0$

$1.$

Compute Mike & Tracy$\text{'}$s predetermined indirect cost allocation rate for the current year based on direct labor hours.

$2.$

Compute the total cost of each job.

$3.$

If Mike & Tracy wants to earn profits equal to$20\%$ of sales$$ revenue, how much$($what total$$ fee$)$ should it charge each of these two$$ clients?

$4.$

Why does Mike & Tracy assign costs to$$ jobs?