Rutland Business Services (RBS) provides miscellaneous consulting and services to local businesses. In August, RBS worked for three clients. It worked 270 hours for Selden Contracting, 170 hours for Moenhart Insurance, and 230 hours for Englewood Medical Center. RBS bills clients at $500 an hour; its labor costs are $125 an hour. A total of 750 hours were worked in August with 80 hours not billable to clients. Overhead costs of $60,000 were incurred and were assigned to clients on the basis of direct labor-hours. Because 80 hours were not billable, some overhead was not assigned to jobs. RBS had $57,000 in marketing and administrative costs. All transactions were on account. Required: What are the revenue and cost per client?

Rutland Business Services (RBS) provides miscellaneous consulting and services to local businesses. In August, RBS worked for three clients. It worked 270 hours for Selden Contracting, 170 hours for Moenhart Insurance, and 230 hours for Englewood Medical Center. RBS bills clients at $500 an hour; its labor costs are $125 an hour. A total of 750 hours were worked in August with 80 hours not billable to clients. Overhead costs of $60,000 were incurred and were assigned to clients on the basis of direct labor-hours. Because 80 hours were not billable, some overhead was not assigned to jobs. RBS had $57,000 in marketing and administrative costs. All transactions were on account. Required: What are the revenue and cost per client?

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter10: Managing Property And Liability Risk

Section10.2: Understanding How Insurance Works

Problem 5CC

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Required:

What are the revenue and cost per client?
Prepare an income statement for August.

RUTLAND BUSINESS SERVICES
Less cost of services to clients:
Less other costs:
Income Statement
For the Month Ended August 31
Total cost of services to clients
Total other costs

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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