a. Eye for detail is an interior decorating firm located in sydney. The following costs were incurred in the firms contract to redecorate the local council offices: direct material $5,600 Professional labour 12 000 The firms budget for the year included the following estimates: Budgeted overhed $800,000 Budgeted proffesional labour 500,000 1. Calculate the total cost of the firms contract to redcorate the council offices. Overhead is applied to contracts using a predetermined overhead rate, calculated annually, based on the professional labour cost. Materials are charged directly to each contract 2. Using the total cost to calculate a service fee, assuming that the company adds a 40 per cent profit margin to total cost. b. Refer to the information for a. 1. Calculate the fee charged to redecorate the council offices assuming that the firm uses a chargeout rate of $360 per professional labour hour, which includes a profit margin of 40 per cent, and 120 hours are worked on the contract. Materials are charged to the client at cost. 2. Explain the key differences between this approach to estimating service fees and the method. 3. which method would you recommend for estimating client fees? Explain your answer.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
a.
Eye for detail is an interior decorating firm located in sydney. The following costs were incurred in the firms contract to redecorate the local council offices:
direct material $5,600
Professional labour 12 000
The firms budget for the year included the following estimates:
Budgeted overhed $800,000
Budgeted proffesional labour 500,000
1. Calculate the total cost of the firms contract to redcorate the council offices.
2. Using the total cost to calculate a service fee, assuming that the company adds a 40 per cent profit margin to total cost.
b.
Refer to the information for a.
1.
Calculate the fee charged to redecorate the council offices assuming that the firm uses a chargeout rate of $360 per professional labour hour, which includes a profit margin of 40 per cent, and 120 hours are worked on the contract. Materials are charged to the client at cost.
2.
Explain the key differences between this approach to estimating service fees and the method.
3.
which method would you recommend for estimating client fees? Explain your answer.
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