The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July: July 3. Charged 420 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $220 per hour. 10. Reimbursed travel costs to employees for depositions related to the Obsidian case, $22,700. 14. Charged 260 hours of professional time for the Obsidian trial at a rate of $270 per hour. 18. Received invoice from consultants Wadsley and Harden for $60,400 for expert testimony related to the Obsidian trial. 27. Applied office overhead at a rate of $65 per professional hour charged to the Obsidian case. 31. Paid administrative and support salaries of $31,400 for the month. 31. Used office supplies for the month, $10,600. 31. Paid professional salaries of $173,000 for the month. 31. Billed Obsidian $330,900 for successful defense of the case. a. Provide the journal entries for each of these transactions. If an amount box does not require an entry, leave it blank. July 3 July 10 July 14 July 18 July 27 July 31 Admin. sal. July 31 Supplies July 31 Prof. sal. July 31 Billed July 31 Cost b. How much office overhead is over- or underapplied? Enter your answer as a positive number. $ c. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services. $
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.
The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July:
| July 3. | Charged 420 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $220 per hour. |
| 10. | Reimbursed travel costs to employees for depositions related to the Obsidian case, $22,700. |
| 14. | Charged 260 hours of professional time for the Obsidian trial at a rate of $270 per hour. |
| 18. | Received invoice from consultants Wadsley and Harden for $60,400 for expert testimony related to the Obsidian trial. |
| 27. | Applied office |
| 31. | Paid administrative and support salaries of $31,400 for the month. |
| 31. | Used office supplies for the month, $10,600. |
| 31. | Paid professional salaries of $173,000 for the month. |
| 31. | Billed Obsidian $330,900 for successful defense of the case. |
a. Provide the
| July 3 | |||
| July 10 | |||
| July 14 | |||
| July 18 | |||
| July 27 | |||
| July 31 Admin. sal. | |||
| July 31 Supplies | |||
| July 31 Prof. sal. | |||
| July 31 Billed | |||
| July 31 Cost | |||
b. How much office overhead is over- or underapplied? Enter your answer as a positive number.
$
c. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.
$
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
