Job order cost accounting for a service company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 45% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $82,600 Take Off Airlines 24,800 Sleepy Tired Hotels 57,800 Tastee Beverages 35,500 Total $200,700 During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Direct Labor Media Purchases Vault Bank $58,900 $219,100 Take Off Airlines 26,300 192,800 Sleepy Tired Hotels 115,800 140,800 Tastee Beverages 131,900 105,300 Total $332,900 $658,000 At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account. a. Journalize the summary entry to record the direct labor costs for the month. a. b. Journalize the ummary entry to record the media purchases for the month. b. c. Journalize the summary entry to record the overhead applied for the month. C. d. Journalize the summary entry to record the completion of Vault Bank and Take Off Airlines for the month. d.
Job order cost accounting for a service company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 45% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $82,600 Take Off Airlines 24,800 Sleepy Tired Hotels 57,800 Tastee Beverages 35,500 Total $200,700 During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Direct Labor Media Purchases Vault Bank $58,900 $219,100 Take Off Airlines 26,300 192,800 Sleepy Tired Hotels 115,800 140,800 Tastee Beverages 131,900 105,300 Total $332,900 $658,000 At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account. a. Journalize the summary entry to record the direct labor costs for the month. a. b. Journalize the ummary entry to record the media purchases for the month. b. c. Journalize the summary entry to record the overhead applied for the month. C. d. Journalize the summary entry to record the completion of Vault Bank and Take Off Airlines for the month. d.
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 16E: Job order cost accounting for a service company The Fly Company provides advertising services for...
Related questions
Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
100%
Transcribed Image Text:Job order cost accounting for a service company
The Fly Company provides advertising services for clients across the nation. The Fly
Company is presently working on four projects, each for a different client. The Fly
Company accumulates costs for each account (client) on the basis of both direct costs
and allocated indirect costs. The direct costs include the charged time of professional
personnel and media purchases (air time and ad space). Overhead is allocated to each
project as a percentage of media purchases. The predetermined overhead rate is 45% of
media purchases.
On August 1, the four advertising projects had the following accumulated costs:
August 1 Balances
Vault Bank
$82,600
Take Off Airlines
24,800
Sleepy Tired Hotels
57,800
Tastee Beverages
35,500
Total
$200,700
During August, The Fly Company incurred the following direct labor and media purchase
costs related to preparing advertising for each of the four accounts:
Direct Labor
Media Purchases
Vault Bank
$58,900
$219,100
Take Off Airlines
26,300
192,800
Sleepy Tired Hotels
115,800
140,800
Tastee Beverages
131,900
105,300
Total
$332,900
$658,000
At the end of August, both the Vault Bank and Take Off Airlines campaigns were
completed. The costs of completed campaigns are debited to the cost of services
account.
a. Journalize the summary entry to record the direct labor costs for the month.
a.
b. Journalize the summary entry to record the media purchases for the month.
b.
c. Journalize the summary entry to record the overhead applied for the month.
C.
d. Journalize the summary entry to record the completion of Vault Bank and Take Off
Airlines for the month.
d.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning