In October, Temptations Event Planners (TEP) planned events for two clients. TEP worked 144 hours for Ward Corporation and 244 hours for Girardin Industries. TEP bills clients at the rate of $370 per hour; labor cost for its planning staff is $160 per hour. The total number of hours worked in October was 388, and overhead costs were $15,800. Overhead is applied to clients at $32 per planner-hour. In addition, TEP had $28,000 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 October.

The cost of services billed is the labour cost and applied overhead plus over/under applied…

Answered: ription rd labor cost rd applied…

Business

Accounting

ription rd labor cost rd applied service overhead rd cost of services billed rd actual service overhead

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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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

In October, Temptations Event Planners (TEP) planned events for two clients. TEP worked 144 hours for Ward Corporation and 244 hours for Girardin Industries. TEP bills clients at the rate of $370 per hour; labor cost for its planning staff is $160 per hour. The total number of hours worked in October was 388, and overhead costs were $15,800. Overhead is applied to clients at $32 per planner-hour. In addition, TEP had $28,000 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 October.

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