Drake Consulting uses a job order costing system, in which each client is a different job. Drake assigns direct labor, daily per diem, and travel cost directly to each job. It allocates indirect costs to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor cost. At the beginning of 2015, the controller prepared the following budget;
Direct Labor Hours Professionals 5,000 hours
Direct Labor Cost Professional $1,000,000
Support Staff Salaries 100,000
Computer Leases 80,000
Office Supplies 20,000
Office Rent 60,000
In November 2015, Drake served several clients. Records for the two clients appear here:
Owen's Trains Marcia's Cookies
Direct Labor Hours 710 hours 200 hours
Meal per Diem $2,500 $600
Travel Costs $7,000 $0
Requirement 3
Allocate Indirect Cost Owen’s Trains Marcia’s
____% X _______ ________
____% X _______ ______
Total Cost ________ ________