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 40% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $86,800 Take Off Airlines 26,000 Sleepy Tired Hotels 60,800 Tastee Beverages 37,300 Total $210,900 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 $57,800 $232,800 Take Off Airlines 25,800 204,800 Sleepy Tired Hotels 113,600 149,600 129,200 111,800 Tastee Beverages $326,400 $699,000 Total 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 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 40% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $86,800 Take Off Airlines 26,000 Sleepy Tired Hotels 60,800 Tastee Beverages 37,300 Total $210,900 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 $57,800 $232,800 Take Off Airlines 25,800 204,800 Sleepy Tired Hotels 113,600 149,600 129,200 111,800 Tastee Beverages $326,400 $699,000 Total 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:a. Journalize the summary entry to record the direct labor costs for the month. If an amount box does not reguire an entry, leave it blank.
a. Work in Process
Salaries Payable
Feedback
b. Journalize the summary entry to record the media purchases for the month. If an amount box does not require an entry, leave it blank.
b. Work in Process
Accounts Payable
Feedback
c. Journalize the summary entry to record the overhead applied for the month. If an amount box does not require an entry, leave it blank.
c. Work in Process
Agency Overhead
Feedback
d. Journalize the summary entry to record the completion of Vault Bank and Take Off Airlines for the month. If an amount box does not require an entry, leave it blank.
d. Cost of Services
Work in Process
Transcribed Image Text:Job Order Cost Accounting 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 40% of media
purchases.
On August 1, the four advertising projects had the following accumulated costs:
August 1 Balances
Vault Bank
$86,800
Take Off Airlines
26,000
Sleepy Tired Hotels
60,800
Tastee Beverages
37,300
Total
$210,900
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
$57,800
$232,800
Take Off Airlines
25,800
204,800
Sleepy Tired Hotels
113,600
149,600
129,200
111,800
Tastee Beverages
$326,400
$699,000
Total
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.
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