The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July: July 3. Charged 690 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $230 per hour. 10. Reimbursed travel costs to employees for depositions related to the Obsidian case, $24,100. 14. Charged 320 hours of professional time for the Obsidian trial at a rate of $270 per hour. 18. Received invoice from consultants Wadsley and Harden for $51,100 for expert testimony related to the Obsidian trial. 27. Applied office overhead at a rate of $65 per professional hour charged to the Obsidian case. 31. Paid administrative and support salaries of $46,600 for the month. 31. Used office supplies for the month, $15,800. 31. Paid professional salaries of $183,400 for the month. 31. Billed Obsidian $440,100 for successful defense of the case. a. Provide the journal entries for each of these transactions. b. How much office overhead is over- or underapplied? Enter your answer as a positive number. c. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.
The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July: July 3. Charged 690 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $230 per hour. 10. Reimbursed travel costs to employees for depositions related to the Obsidian case, $24,100. 14. Charged 320 hours of professional time for the Obsidian trial at a rate of $270 per hour. 18. Received invoice from consultants Wadsley and Harden for $51,100 for expert testimony related to the Obsidian trial. 27. Applied office overhead at a rate of $65 per professional hour charged to the Obsidian case. 31. Paid administrative and support salaries of $46,600 for the month. 31. Used office supplies for the month, $15,800. 31. Paid professional salaries of $183,400 for the month. 31. Billed Obsidian $440,100 for successful defense of the case. a. Provide the journal entries for each of these transactions. b. How much office overhead is over- or underapplied? Enter your answer as a positive number. c. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter5: Product And Service Costing: Job-order System
Section: Chapter Questions
Problem 21E: Lorrimer Company has a job-order cost system. The following debits (credits) appeared in the...
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The law firm of Furlan and Benson accumulates costs associated with individual cases, using a
July 3. | Charged 690 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $230 per hour. |
10. | Reimbursed travel costs to employees for depositions related to the Obsidian case, $24,100. |
14. | Charged 320 hours of professional time for the Obsidian trial at a rate of $270 per hour. |
18. | Received invoice from consultants Wadsley and Harden for $51,100 for expert testimony related to the Obsidian trial. |
27. | Applied office overhead at a rate of $65 per professional hour charged to the Obsidian case. |
31. | Paid administrative and support salaries of $46,600 for the month. |
31. | Used office supplies for the month, $15,800. |
31. | Paid professional salaries of $183,400 for the month. |
31. | Billed Obsidian $440,100 for successful defense of the case. |
a. Provide the
b. How much office overhead is over- or underapplied? Enter your answer as a positive number.
c. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.
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