Vista Design is an interior design firm. The firm uses a job cost system in which each client is a different "job."Vista Design traces direct labor, licensing costs, and travel costs directly to each job (client). It allocates indirect costs to jobs based on a predetermined indirect cost allocation rate computed as a percentage of direct labor costs

At the beginning of the current year, managing partner Brenna Gladstone prepared the following budget:

Direct labor hours (professional). . . . . . .	7,500 hours
Direct labor costs (professional). . . . . . .	$1,500,000
Support staff salaries. . . . . . . . . . . . . . . .	$180,000
Computer lease payments. . . . . . . . . . . .	$46,000
Office supplies. . . . . . . . . . . . . . . . . . . . .	$24,000
Office rent. . . . . . . . . . . . . . . . . . . . . . . . .	$65,000

Later that same year in November, Vista Design served several clients. Records for two clients appear here:

	Tasty Coop		SunNow.com
Direct labor hours. . . . . . . . . .	760 hours		55 hours
Licensing costs. . . . . . . . . . . .	$2,800		$350
Travel costs. . . . . . . . . . . . . . .	$9,000		$0

.1	Compute Vista Design's predetermined indirect cost allocation rate for the current year.
2.	Compute the total cost of each of the two jobs listed.
3.	If VistaDesign wants to earn profits equal to 30%of sales revenue, how much (what total fee) should the company charge each of these two clients?
4.	Why does Vista Design assign costs to jobs?

Requirement 1. Compute Vista Design's predetermined indirect cost allocation rate for the current year.

Identify the formula, then compute the rate. (Enter the result as a whole number.)

					Predetermined indirect
		/		=	cost allocation rate
		/		=		%

Requirement 2. Compute the total cost of each of the two jobs listed.

First enter in the direct costs for each job, then enter in the indirect costs and total cost for the jobs. (Complete all answer boxes. For accounts with no balance, make sure to enter "0" in the appropriate cell. Enter percentage amounts as a whole number. Round your answers to the nearest whole dollar.)

Vista Design
Estimated Cost of Tasty Coop and SunNow.com Jobs
				Tasty Coop	SunNow.com
Direct Costs:
		hours x
		hours x
Total Direct Costs

Indirect Costs:
		% x
		% x
Total Cost

Requirement 3 If Vista Design wants to earn profits equal to 30% of sales revenue, how much (what total fee) should the company charge each of these two clients?

Identify the formula then determine the amount Vista Design should charge these clients. (Round your answers to the nearest whole dollar.)

/

=

Fee charged

Tasty Coop

/

%

=

SunNow.com

/

%

=

Requirement 4. Why does

Vista Design assign costs to jobs?

Vista Design assigns costs to jobs to help the company (increase labor hours,lower employee wages,set fees) that cover all costs and contribute to profit. Assigning costs to

(a grouping of clients, individual clients) also can help Vista Design control costs.