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undefined Marsha Design is an interior design and consulting firm. The firm uses a job order cost system in which each client represents an individual
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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 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: Direct labor hours (professional) Direct labor costs (professional) Support staff salaries Office rent Office supplies Total expected indirect costs 4,900 hours $ 490,000 54,400 54,000 19,000 $ 127,400 Later that same year, in March, Marsha Design served several clients. Records for two clients appear below: Oliverio McComb Direct labor cost (professional) $3,900 $2,900 Travel costs 700 300 Direct labor hours 39 hours 29 hours Required: 1. Compute Marsha Design's predetermined overhead rate for the current year. Predetermined Overhead Rate per Direct Labor Hour 2. Compute the total cost of serving the clients listed. Oliverio McComb Total Cost to Serve 3. Assume that Marsha charges clients $290 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? Oliverio McComb Gross ProfitStep by Step Solution
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