
Concept explainers
(a)
The job order cost accounting system is also used by service business. But the usage of job order cost system by service business for the service provided to the business. The service business which is using job order costing provides services which are unique to each customers with related costs that are very importance with each customer.
To record:
(a)

Answer to Problem 15E
The journal entries for each transaction is prepared as follows:
Date | Account titles and Explanation | Debit ($) | Credit ($) | |||||
July | 03 | Work in process (175 hours × $150) | 26,250 | |||||
Salaries Payable | 26,250 | |||||||
(Record charges for professional services) | ||||||||
July | 10 | Work in process | 12,500 | |||||
Cash | 12,500 | |||||||
(Record reimbursement of travel costs) | ||||||||
July | 14 | Work in process (260 hours × $185) | 48,100 | |||||
Salaries Payable | 48,100 | |||||||
(Record professional charges) | ||||||||
July | 18 | Work in process | 30,000 | |||||
Consultant fees payable | 30,000 | |||||||
(Record invoice for expert testimony) | ||||||||
July | 27 | Work in process (435 hours × $62) | 26,970 | |||||
Office |
26,970 | |||||||
(Record factory overhead applied) | ||||||||
July | 31 | Office overhead | 28,500 | |||||
Cash | 28,500 | |||||||
(Record administrative and support salaries paid) | ||||||||
July | 31 | Office overhead | 4,000 | |||||
Supplies | 4,000 | |||||||
(Record office supplies used) | ||||||||
July | 31 | Salaries payable | 74,350 | |||||
Cash | 74,350 | |||||||
(Record payment of professional salaries) | ||||||||
July | 31 | 172,500 | ||||||
Fees earned | 172,500 | |||||||
(Record payment of professional salaries) | ||||||||
July | 31 | Cost of services (1) | 143,820 | |||||
Work in process | 143,820 | |||||||
(Record cost of services for the month) |
Table (1)
Explanation of Solution
Working note:
The cost of services is calculated as follows:
(b)
To calculate: if the factory overhead is under-applied or over-applied.
(b)

Answer to Problem 15E
The under (or) over applied overhead is calculated as follows:
Particulars | Amount ($) |
Office overhead incurred (2) | 32,500 |
Less: Office overhead applied | 26,970 |
Underapplied overhead | 5,530 |
Table (2)
Explanation of Solution
Working note:
The overhead incurred is calculated as follows:
The factory overhead is under applied by $5,530.
(c)
gross profit for the service provided for O case.
(c)

Answer to Problem 15E
Answer:
The gross profit is calculated as follows:
Particulars | Amount ($) |
Fees earned | 172,500 |
Less: Cost of services (2) | 149,350 |
Gross Profit | 23,150 |
Table (3)
Explanation of Solution
Working note:
The cost of services is calculated as follows:
Gross profit for the service is $23,150.
Want to see more full solutions like this?
Chapter 2 Solutions
Managerial Accounting, Loose-leaf Version
- Chipa Corp. started the year with total assets of $303,000 and total liabilities of $243,000. During the year the business recorded $631,000 in revenues, $329,000in expenses, and dividends of $57,000. Stockholders' equity at the end of the year was _. Solve the financial accounting problem.arrow_forwardTutor, need your helparrow_forwardGet correct answer with general accountingarrow_forward
- Olivia, single and age 58, sold her home for $485,000 after living there for 10 years. Her selling expenses were $9,000 and her adjusted basis in the home was $200,000. What is the maximum gain that Olivia must report in connection with the sale of her principal residence? a) $26,000 b) $0 c) $285,000 d) $276,000arrow_forwardBrightCo has a net income of $5.4 million and 2 million common shares outstanding. Each share is currently trading at $27 in the stock market. What is BrightCo's current EPS and P/E ratio?arrow_forwardNonearrow_forward
- Miller Manufacturing, which produces a single product, has provided the following data for its most recent month of operations: • Number of units produced: 1,200 • Variable costs per unit: o Direct materials: $60 о Direct labor: $50 • о Variable manufacturing overhead: $9 Variable selling and administrative expense: $10 Fixed costs: о Fixed manufacturing overhead: $48,000 。 Fixed selling and administrative expense: $84,000 There were no beginning or ending inventories. The absorption costing unit product cost was: a) $172 per unit b) $230 per unit c) $119 per unit d) $159 per unitarrow_forwardStep by step answerarrow_forwardWhat is the gross margin for August on these financial accounting question?arrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting, Chapters 1-27 (New in Account...AccountingISBN:9781305666160Author:James A. Heintz, Robert W. ParryPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,




