Crow Design, Inc. is a website design and consulting firm. The firm uses a job order costing

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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:


Crow Design, Inc. is a website design and consulting firm.


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

Crow Design, Inc. is a website design and consulting firm.


Requirements
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?

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Horngrens Financial and Managerial Accounting

ISBN: 978-0133255584

4th Edition

Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura

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