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Webster and Jones are an advertising agency. The firm uses a job costing system in which each client is a different job. The company traces
Webster and Jones are an advertising agency. The firm uses a job costing system in which
each client is a different "job". The company traces direct labour, software licensing costs
and travel costs directly to each job client It allocates indirect costs to jobs based on a
predetermined overhead rate computed as a percentage of direct labour costs.
At the beginning of the current year, managing partner Richard Latour prepared the following
budget:
During January of the current year, Webster and Jones served several clients.
Records for two clients appear as follows:
Required:
Compute Webster and Jone's predetermined indirect cost allocation rate for the
current year based on direct labour hours.
Compute the total cost of each of the two jobs listed.
If Webster and Jones want to earn profits equal to of sales revenue, how
much what total fee should it charge each of these two clients?
Why does the company assign costs to jobs?
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