Wildwind Inc. is a technology consulting firm focused on website development and integration of internet business...
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Wildwind Inc. is a technology consulting firm focused on website development and integration of internet business applications. President Priscilla Hancin's ear is ringing after an unpleasant call from client Jonathan Washburn. Washburn was irate after opening his bill for Wildwind's redesign of his company's website. Washburn said that Wildwind's major competitor, Sigma Applications, charged much lower fees to another company for which Washburn serves on the board of directors. Hancin is puzzled for two reasons. First, she is confident that her firm knows website design and support as well as any of Wildwind's competitors. Hancin cannot understand how Sigma Applications can undercut Wildwind's rates and still make a profit. But Sigma Applications is reputed to be very profitable. Second, just yesterday Hancin received a call from client Robert Cordaro. Cordaro was happy with the excellent service and reasonable fees Hancin charged him for adding a database-driven job-posting feature to his company's website. Hancin was surprised by Cordaro's compliments because this was an unusual job for Wildwind that required development of complex database management and control applications, and she had felt a little uneasy accepting it. Like most consulting firms, Wildwind traces direct labour to individual engagements (jobs). Wildwind allocated indirect costs to engagements using a budgeted rate based on direct labour hours. Hancin is happy with this system, which she has used since she established Wildwind in 1995. Hancin expects to incur $722,000 of indirect costs this year, and she expects her firm to work 5,100 direct labour hours. Hancin and the other systems consultants earn 5390 per hour. Clients are billed at 195% of direct labour cost Last month. Wildwind's consultants spent 145 hours on Washburn's engagement. They also spent 145 hours on Cordaro's engagement. Information relating to Wildwind Inc. follows: A (Click the icon to view the company's information.) 1. Compute Wildwind's indirect cost allocation rate. 2. Compute the total costs assigned to the Washburn and Cordaro engagements. 3. Compute the operating income from the Washburn and Cordaro engagements. Requirement 1. Compute Wildwind's indirect cost allocation rate. First identify the formula used to compute the indirect cost allocation rate, then compute the rate. (Round your answer to two decimal places.) Indirect cost allocation rate (per hr) Requirement 2. Compute the total costs assigned to the Washburn and Cordaro engagements. (Round your answers to the nearest whole dollar.) Washburn Cordaro Total costs Wildwind Inc. is a technology consulting firm focused on website development and integration of internet business applications. President Priscilla Hancin's ear is ringing after an unpleasant call from client Jonathan Washburn. Washburn was irate after opening his bill for Wildwind's redesign of his company's website. Washburn said that Wildwind's major competitor, Sigma Applications, charged much lower fees to another company for which Washburn serves on the board of directors. Hancin is puzzled for two reasons. First, she is confident that her firm knows website design and support as well as any of Wildwind's competitors. Hancin cannot understand how Sigma Applications can undercut Wildwind's rates and still make a profit. But Sigma Applications is reputed to be very profitable. Second, just yesterday Hancin received a call from client Robert Cordaro. Cordaro was happy with the excellent service and reasonable fees Hancin charged him for adding a database-driven job-posting feature to his company's website. Hancin was surprised by Cordaro's compliments because this was an unusual job for Wildwind that required development of complex database management and control applications, and she had felt a little uneasy accepting it. Like most consulting firms, Wildwind traces direct labour to individual engagements (jobs). Wildwind allocated indirect costs to engagements using a budgeted rate based on direct labour hours. Hancin is happy with this system, which she has used since she established Wildwind in 1995. Hancin expects to incur $722,000 of indirect costs this year, and she expects her firm to work 5,100 direct labour hours. Hancin and the other systems consultants earn 5390 per hour. Clients are billed at 195% of direct labour cost Last month. Wildwind's consultants spent 145 hours on Washburn's engagement. They also spent 145 hours on Cordaro's engagement. Information relating to Wildwind Inc. follows: A (Click the icon to view the company's information.) 1. Compute Wildwind's indirect cost allocation rate. 2. Compute the total costs assigned to the Washburn and Cordaro engagements. 3. Compute the operating income from the Washburn and Cordaro engagements. Requirement 1. Compute Wildwind's indirect cost allocation rate. First identify the formula used to compute the indirect cost allocation rate, then compute the rate. (Round your answer to two decimal places.) Indirect cost allocation rate (per hr) Requirement 2. Compute the total costs assigned to the Washburn and Cordaro engagements. (Round your answers to the nearest whole dollar.) Washburn Cordaro Total costs
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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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