Exercise 7-41 (Algo) Job Costing in a Service Organization (LO 7-4)For August, Royal Consulting and Mediation Practice (RCMP) worked 750 hours for Alberta Company and 1,850 hours for Ontario Corporation. RCMP bills clients at the rate of $580 per hour; labor cost for its consulting staff is $380 per hour. The total number of hours worked in August was 2,600, and overhead costs were $58,000. Overhead is applied to clients at $28 per labor-hour. In addition, RCMP had $330,000 in marketing and administrative costs. All transactions are on account. All services were billed. TransactionDescription(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 August. Required AShow labor and overhead cost flows through T-accounts. Wages Payable Work-In-ProcessBeg. bal. Beg. bal. End. bal. End. bal. Cost of Services Billed Service Overhead ControlBeg. bal. Beg. bal. End. bal. End. bal. Applied Service O.H.Beg. bal. End. bal.

a) Wages Payable Beg Bal 0 0 988,000 a End Bal 58,000 Work in Process…

Answered: a. Show labor and overhead cost flows…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Exercise 7-41 (Algo) Job Costing in a Service Organization (LO 7-4)

For August, Royal Consulting and Mediation Practice (RCMP) worked 750 hours for Alberta Company and 1,850 hours for Ontario Corporation. RCMP bills clients at the rate of $580 per hour; labor cost for its consulting staff is $380 per hour. The total number of hours worked in August was 2,600, and overhead costs were $58,000. Overhead is applied to clients at $28 per labor-hour. In addition, RCMP had $330,000 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 August.

Required A

Show labor and overhead cost flows through T-accounts.

Wages Payable	Work-In-Process
Beg. bal.		Beg. bal.

End. bal.
		End. bal.

Cost of Services Billed	Service Overhead Control
Beg. bal.		Beg. bal.


End. bal.		End. bal.

Applied Service O.H.
Beg. bal.

End. bal.