Tellit.ca is an internet advertising agency. The firm uses a job cost system in which each client is a different "job." Tellit.ca traces direct labour, software licensing costs, and travel costs directly to each client (job). The company allocates the indirect costs to jobs based on a predetermined indirect cost allocation rate based on direct labour hours.
At the beginning of the current year, managing partner, Sylvia Long prepared a budget:

Requirements:
1. Compute Tellit.ca's predetermined indirect cost allocation rate for the current year based on direct labour hours.
2. Compute the total cost on each job.
3. If Tellit.ca wants to earn profits equal to 30% of total cost, then how much (what total fee) should it charge each of these clients?

Question

Tellit.ca is an internet advertising agency. The firm uses a job cost system in which each client is a different "job." Tellit.ca traces direct labour, software licensing costs, and travel costs directly to each client (job). The company allocates the indirect costs to jobs based on a predetermined indirect cost allocation rate based on direct labour hours.
At the beginning of the current year, managing partner, Sylvia Long prepared a budget:
 
 Requirements:
1. Compute Tellit.ca's predetermined indirect cost allocation rate for the current year based on direct labour hours.
2. Compute the total cost on each job.
3. If Tellit.ca wants to earn profits equal to 30% of total cost, then how much (what total fee) should it charge each of these clients?

Quizplus · Accepted Answer

The Answer of Tellit.ca is an internet advertising agency. The firm uses a job cost system in which each client is a different "job." Tellit.ca traces direct labour, software licensing costs, and travel costs directly to each client (job). The company allocates the indirect costs to jobs based on a predetermined indirect cost allocation rate based on direct labour hours.
At the beginning of the current year, managing partner, Sylvia Long prepared a budget:
 
 Requirements:
1. Compute Tellit.ca's predetermined indirect cost allocation rate for the current year based on direct labour hours.
2. Compute the total cost on each job.
3. If Tellit.ca wants to earn profits equal to 30% of total cost, then how much (what total fee) should it charge each of these clients?

TellitCa Is an Internet Advertising Agency