For August, Royal Consulting and Mediation Practice (RCMP) worked 700 hours for Alberta Company and 1,600 hours for Ontario Corporation. RCMP bills clients at the rate of $520 per hour; labor cost for its consulting staff is $320 per hour. The total number of hours worked in August was 2,300, and overhead costs were $52,000. Overhead is applied to clients at $30 per labor-hour. In addition, RCMP had $300,000 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.
For August, Royal Consulting and Mediation Practice (RCMP) worked 700 hours for Alberta Company and 1,600 hours for Ontario Corporation. RCMP bills clients at the rate of $520 per hour; labor cost for its consulting staff is $320 per hour. The total number of hours worked in August was 2,300, and overhead costs were $52,000. Overhead is applied to clients at $30 per labor-hour. In addition, RCMP had $300,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Exercise 7-41 (Algo) Job Costing in a Service Organization (LO 7-4)
For August, Royal Consulting and Mediation Practice (RCMP) worked 700 hours for Alberta Company and 1,600 hours for Ontario Corporation. RCMP bills clients at the rate of $520 per hour; labor cost for its consulting staff is $320 per hour. The total number of hours worked in August was 2,300, and
| 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.
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