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Skylark Design, Inc. is a Web site design and consulting firm. The firm uses a job order costing system in which each client is a
Skylark Design, Inc. is a Web site design and consulting firm. The firm uses a job order costing system in which each client is a different job. Skylark Design assigns direct labor, licensing costs, and travel costs directly to each job. It allocates indirect costs to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs. Read the requirements. At the beginning of 2018, managing partner Holly Bickers prepared the following budget estimates: (Click the icon to view the prepared budget.) In November 2018, Skylark Design served several clients. Records for two clients appear here: (Click the icon to view the records for two clients.) Requirement 1. Compute Skylark Design's direct labor rate and its predetermined overhead allocation rate for 2018. (Abbreviation used: OH = overhead.) Begin with the direct labor rate. Data table Direct labor hours (professionals) Direct labor costs (professionals) $ 2,100,000 Support staff salaries Computer leases Office supplies Office rent Print Done = Direct labor rate per hour Data table Food Coop 10,000 hours Direct labor hours 800 hours White Chocolates 100 hours Software licensing costs 5 497,000 Travel costs 4,500 $ 7,000 300 0 49,000 24,000 60,000 Dess - X Requirements 1. Compute Skylark Design's direct labor rate and its predetermined overhead allocation rate for 2018. 2. Compute the total cost of each job. 3. If Bickers wants to earn profits equal to 20% of service revenue, what fee should she charge each of these two clients? 4. Why does Skylark Design assign costs to jobs
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