P20-6 Job order costing in a service company [20-25 min) Skylark Design is a website design and consulting firm. The firm uses a job order costing system in which each client is a different job. Skylark Design traces direct labour, licensing costs and travel costs directly to each job. It allocates indirect costs to jobs based on a predetermined overhead allocation rate, calculated as a percentage of direct labour costs. At the beginning of 2016, managing partner Judy Jacquin prepared the following budget estimates: Direct labour hours (professionals) 8 000 hours Direct labour costs (professionals) $2 000 000 Support staff salaries 664 000 Computer leases 47 000 Office supplies 23 000 Office rent 66 000 In November 2016, Skylark Design served several clients. Records for two clients appear here: Food Co-op Martin Chocolates Direct labour hours 900 hours 100 hours Software licensing costs 53 500 $100 Travel costs 11 000 Requirements 1 Calculate Skylark Design's direct labour rate and its predetermined overhead cost allocation rate for 2016. 2 Calculate the total cost of each job. 3 If Judy wants to earn profits equal to 50% of service revenue, what fee should she charge to each of these two clients? 4 Why does Skylark Design assign costs to jobs