Question: IBM undertakes a special project to develop custom software for a client. In February 2040, the following costs are incurred: Direct Materials: $500,000 Direct Labor:

  1. IBM undertakes a special project to develop custom software for a client. In February 2040, the following costs are incurred:
    • Direct Materials: $500,000
    • Direct Labor: $1,200,000
    • Indirect Costs: $300,000

Requirements:

  • Calculate the total job cost.
  • Allocate indirect costs using a predetermined overhead rate.
  • Prepare a job cost sheet.
  • Analyze the project profitability.

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