Job Order Costing for a Service Company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 45% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances $82,200 24,700 57,500 35,300 $199,700 Vault Bank Take Off Airlines Sleepy Tired Hotels Tastee Beverages Total During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Direct Labor $57,600 25,700 113,300 128,900 $325,500 Vault Bank Take Off Airlines Sleepy Tired Hotels Tastee Beverages Total Media Purchases $211,500 186,100 135,900 101,500 $635,000 At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account. a. Journalize the summary entry to record the direct labor costs for the month. If an amount box does not require an entry, leave it blank. a. Work in Process Salaries Payable
Job Order Costing for a Service Company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 45% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances $82,200 24,700 57,500 35,300 $199,700 Vault Bank Take Off Airlines Sleepy Tired Hotels Tastee Beverages Total During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Direct Labor $57,600 25,700 113,300 128,900 $325,500 Vault Bank Take Off Airlines Sleepy Tired Hotels Tastee Beverages Total Media Purchases $211,500 186,100 135,900 101,500 $635,000 At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account. a. Journalize the summary entry to record the direct labor costs for the month. If an amount box does not require an entry, leave it blank. a. Work in Process Salaries Payable
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Job Order Costing for a Service Company
The Fly Company provides advertising services for clients across the nation. The Fly Company is presently
working on four projects, each for a different client. The Fly Company accumulates costs for each account
(client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of
professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a
percentage of media purchases. The predetermined overhead rate is 45% of media purchases.
On August 1, the four advertising projects had the following accumulated costs:
August 1 Balances
$82,200
24,700
57,500
35,300
$199,700
Vault Bank
Take Off Airlines
Sleepy Tired Hotels
Tastee Beverages
Total
During August, The Fly Company incurred the following direct labor and media purchase costs related to
preparing advertising for each of the four accounts:
Vault Bank
Take Off Airlines
Sleepy Tired Hotels
Tastee Beverages
Total
Direct Labor
$57,600
25,700
113,300
128,900
$325,500
At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of
completed campaigns are debited to the cost of services account.
a. Work in Process
a. Journalize the summary entry to record the direct labor costs for the month. If an amount box does not
require an entry, leave it blank.
Salaries Payable ✔
Media Purchases
$211,500
186,100
135,900
101,500
$635,000
E
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