Widget Design, Inc., is a web site design and consulting firm. The firm uses a job order costing system, in which each client is a different job. Widget Design traces direct labor, licensing costs, and travel costs directly to each job. It allocates indirect costs to jobs based on a predetermined indirect cost allocation rate, computed as a percentage of direct labor costs.

At the beginning of 2011, managing partner Judi Johnson prepared the following budget:

Direct Labor Hours 10,000 hours

Direct Labor Costs $1,400,000

Support Staff Salaries $170,000

Computer Leases $49,000

Office Supplies $29,000

Office Rent $60,000

In November 2011, Widget Design served several clients. Records for two clients appear here:

	Dining coop	root choc
direct labor hours	740 hours	65 hours
software licensing costs	2100	300
travel costs	9000	0

Deliverables 1.

Compute Widget Design's predetermined indirect cost allocation rate for 2011.

2. Compute the total cost of each job.

3. If Widget wants to earn profits equal to 20% of sales revenue, how much (what fee) should it charge each of these two clients?

4. Why does Widget Design assign costs to jobs?

Deliverable 1:

The predetermined indirect cost allocation rate=

Hint: Do this with a formula showing indirect costs to total direct labor costs

Deliverable 2: First enter in the direct costs for each job. Then enter in the indirect costs and total costs for the jobs.

	dining costs	Root choc
direct costs:
direct labor
software licensing costs
travel
total direct labor costs
Indirect costs:
Total Costs

Deliverable 3: Determine the amount Robin Design, Inc. should charge these clients. Dining Coop: Root Choc: Deliverable 4:Widget Designs, Inc. assigns costs to jobs to help the company Assigning costs to: