Concept explainers
TechMaster is an information technology (IT) consulting company offering services to small firms. TechMaster bills clients for its various services based on the hours its professionals spend. In August, IT professionals billed 875 hours to clients and worked a total of 920 hours (the difference includes time for training, preparing bids, and so on, which are considered administrative costs). TechMaster bills clients at the rate of $200 per hour; labor cost for its IT professionals is $75 per hour.
Required
- a. Show labor and overhead cost flows through T-accounts.
- b. Prepare an income statement for the company for August.
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