This problem continues the Daniels Consulting situation from Problem P16-42 of Chapter 16. Daniels Consulting uses a job order costing system in which each client is a different job. Daniels assigns direct labor, meal per diem, 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.
At the beginning of 2018, the controller prepared the following budget:
Direct labor hours (professionals)........6,250 hours
Direct labor costs (professionals)........$ 1,100,000
Support staff salaries............... 90,000
Computer leases................ 57,000
Office supplies................ 40,000
Office rent................. 55,000
In November 2018, Daniels served several clients. Records for two clients appear here:

Requirements
1. Compute Daniels€™s predetermined overhead allocation rate for 2018.
2. Compute the total cost of each job.
3. If Daniels wants to earn profits equal to 25% of sales revenue, what fee should it charge each of these two clients?
4. Why does Daniels assign costs to jobs?

Transcribed Image Text:

Tommy's Trains Marcia's Cookies 720 hours $2,700 200 hours Direct labor hours Meal per diem Travel costs 5 600 8,000