Exercise 7-42 (Algo) Job Costing in a Service Organization (LO 7-4) Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 440 hours for Massive Airframes and 671 hours for Gigantic Drydocks. AB bills clients at the rate of $515 per hour; labor cost for its professional staff is $210 per hour. Overhead costs in March totaled $41,010. Overhead is applied to clients at $44 per labor-hour. In addition, AB had $199,700 in marketing and administrative costs. All transactions are on account. All services were billed. Transaction Description (a) Record Labor cost (b) Record Applied Service Overhead (c) Record Cost of services billed (d) Record Actual Service Overhead Required: a. Show labor and overhead cost flows through T-accounts. b. Prepare an income statement for the company for March.
Exercise 7-42 (Algo) Job Costing in a Service Organization (LO 7-4) Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 440 hours for Massive Airframes and 671 hours for Gigantic Drydocks. AB bills clients at the rate of $515 per hour; labor cost for its professional staff is $210 per hour. Overhead costs in March totaled $41,010. Overhead is applied to clients at $44 per labor-hour. In addition, AB had $199,700 in marketing and administrative costs. All transactions are on account. All services were billed. Transaction Description (a) Record Labor cost (b) Record Applied Service Overhead (c) Record Cost of services billed (d) Record Actual Service Overhead Required: a. Show labor and overhead cost flows through T-accounts. b. Prepare an income statement for the company for March.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter2: Job Order Costing
Section: Chapter Questions
Problem 4BE: Applying factory overhead Bergan Company estimates that total factory overhead costs will be 620,000...
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Exercise 7-42 (Algo) Job Costing in a Service Organization (LO 7-4)
Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 440 hours for Massive Airframes and 671 hours for Gigantic Drydocks. AB bills clients at the rate of $515 per hour; labor cost for its professional staff is $210 per hour. Overhead costs in March totaled $41,010. Overhead is applied to clients at $44 per labor-hour. In addition, AB had $199,700 in marketing and administrative costs. All transactions are on account. All services were billed.
| Transaction | Description |
| (a) | Record Labor cost |
| (b) | Record Applied Service Overhead |
| (c) | Record Cost of services billed |
| (d) | Record Actual Service Overhead |
Required:
a. Show labor and overhead cost flows through T-accounts.
b. Prepare an income statement for the company for March.
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