Reference no: EM133381313

Question: Sierra Design is an interior design firm. The firm uses a job cost system in which each ent is a different "job.Sierra Design traces direct labor, licensing costs, and travel costs directly to each job (client). 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 the current year, managing partner Laurie Walker prepared the following budget : 10,000 hours 1,100,000 Direct labor hours ( professional ). Direct labor costs (professional ) Support staff salaries Computer lease payments . Office supplies 140,000 46,000 $ 26,000 Office rent 63,000 Later that same year in November , Sierra Design served several clients Records for two clients appear here: DineNow.com Direct labor hours Licensing costs Travel costs Delightful Dining 710 hours 2,300 40 hours 300 $ 10,000 Requirements

1. Compute Sierra Design's predetermined indirect cost allocation rate for the current year Compute the total cost of each of the two jobs listed

2. If Sierra Design wants to earn profits equal to 20 % of sales revenue , how much ( what total fee ) should the company charge each of these two clients ?

3. Why does Sierra Design assign costs to jobs ?