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 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 predetermine overhead rate is 50% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $83,300 Take Off Airlines 25,000 Sleepy Tired Hotels 58,300 Tastee Beverages 35,800 Total $202,400 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 Media Purchases Vault Bank $58,200 $212,500 Take Off Airlines 26,000 186,900 Sleepy Tired Hotels 114,500 136,500 Tastee Beverages 130,300 102,100 Total $329,000 $638,000 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.

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 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 predetermine overhead rate is 50% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $83,300 Take Off Airlines 25,000 Sleepy Tired Hotels 58,300 Tastee Beverages 35,800 Total $202,400 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 Media Purchases Vault Bank $58,200 $212,500 Take Off Airlines 26,000 186,900 Sleepy Tired Hotels 114,500 136,500 Tastee Beverages 130,300 102,100 Total $329,000 $638,000 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.

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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