Crow Design, Inc. is a website design and consulting firm. The firm uses a job order costing system in which each client is a different job. Crow 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. At the beginning of 2014, managing partner Sally Simone prepared the following budget estimates:

In November 2014, Crow Design served several clients. Records for two clients appear here:

1. Compute Crow Design’s direct labor rate and its predetermined overhead ­allocation rate for 2014.
2. Compute the total cost of each job.
3. If Simone wants to earn profits equal to 50% of service revenue, what fee should she charge each of these two clients?
4. Why does Crow Design assign costs tojobs?

  • CreatedJanuary 16, 2015
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