Exercise 7-42 (Algo) Job Costing In a Service Organization (LO 7-4) Allocation Busters (A) is a dispute mediation firm offering services to firms in disputes about cost alocations with government agencies. For March, AB worked 451 hours for Massive Airfames and 672 hours for Gigantic Drydocks. AB bils clients at the rate of $503 per hour, labor cost for its professional staff is $210 per hour Overhead costs in March totaled $4750. Overhead is applied to clients at $41 per labor-hour in addition, AB had $199.800 in marketing and administrative costs. All transactions are on account. All services were biled Transaction Description (a) hecord Laboe cost te) (4) Record Applied Service overhead hecerd Cont ot services billed ecord Actual Bervice overbead Required: a. Show labor and overhead cost flows through T-accounts D. Prepare an income statement for the company for March Complete this question by entering your answers in the tabs below.
Exercise 7-42 (Algo) Job Costing In a Service Organization (LO 7-4) Allocation Busters (A) is a dispute mediation firm offering services to firms in disputes about cost alocations with government agencies. For March, AB worked 451 hours for Massive Airfames and 672 hours for Gigantic Drydocks. AB bils clients at the rate of $503 per hour, labor cost for its professional staff is $210 per hour Overhead costs in March totaled $4750. Overhead is applied to clients at $41 per labor-hour in addition, AB had $199.800 in marketing and administrative costs. All transactions are on account. All services were biled Transaction Description (a) hecord Laboe cost te) (4) Record Applied Service overhead hecerd Cont ot services billed ecord Actual Bervice overbead Required: a. Show labor and overhead cost flows through T-accounts D. Prepare an income statement for the company for March Complete this question by entering your answers in the tabs below.
Exercise 7-42 (Algo) Job Costing In a Service Organization (LO 7-4) Allocation Busters (A) is a dispute mediation firm offering services to firms in disputes about cost alocations with government agencies. For March, AB worked 451 hours for Massive Airfames and 672 hours for Gigantic Drydocks. AB bils clients at the rate of $503 per hour, labor cost for its professional staff is $210 per hour Overhead costs in March totaled $4750. Overhead is applied to clients at $41 per labor-hour in addition, AB had $199.800 in marketing and administrative costs. All transactions are on account. All services were biled Transaction Description (a) hecord Laboe cost te) (4) Record Applied Service overhead hecerd Cont ot services billed ecord Actual Bervice overbead Required: a. Show labor and overhead cost flows through T-accounts D. Prepare an income statement for the company for March Complete this question by entering your answers in the tabs below.
a. Show labor and overhead cost flows through T-accounts.
b. Prepare an income statement for the company for March.
Transcribed Image Text:Exercise 7-42 (Algo) Job Costing In a Service Organlzatlon (LO 7-4)
Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government
agencies. For March, AB worked 451 hours for Massive Airframes and 672 hours for Gigantic Drydocks. AB bills clients at the rate of
$503 per hour, labor cost for its professional staff is $210 per hour. Overhead costs in March totaled $41,750. Overhead is applied to
clients at $41 per labor-hour. In addition, AB had $199,800 in marketing and administrative costs. All transactions are on account. Al
services were billed.
Transaction Deseription
(a)
(b)
(e)
(d)
Record Labor cost
Record Applied Service overhead
Record Cost of services billed
Record Actual Bervice overhead
Required:
a. Show labor and overhead cost flows through T-accounts.
b. Prepare an income statement for the company for March.
Complete this question by entering your answers in the tabs below.
Required A
Required
Show labor and overhead cost flows through T-accounts.
Work-in-Process
Wages Payable
Deg ba
Beg ba
End. be
End. ba
Cost of Services Billed
Service Overhead Control
Beg bal.
Beg ba
End ba
End ta
Appled Service O.H.
Beg ba
End, ba
Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.
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