Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 453 hours for Massive Airframes and 679 hours for Gigantic Drydocks. AB bills clients at the rate of $512 per hour; labor cost for its professional staff is $200 per hour. Overhead costs in March totaled $40,090. Overhead is applied to clients at $42 per labor-hour. In addition, AB had $198,700 in marketing and administrative costs. All transactions are on account. All services were billed. Transaction Description (a) Record Labor cost (b) Record Applied Service Overhead (c) Record Cost of services billed (d) Record Actual Service Overhead Required: a. Show labor and overhead cost flows through T-accounts. b. Prepare an income statement for the company for March.

Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 453 hours for Massive Airframes and 679 hours for Gigantic Drydocks. AB bills clients at the rate of $512 per hour; labor cost for its professional staff is $200 per hour. Overhead costs in March totaled $40,090. Overhead is applied to clients at $42 per labor-hour. In addition, AB had $198,700 in marketing and administrative costs. All transactions are on account. All services were billed. Transaction Description (a) Record Labor cost (b) Record Applied Service Overhead (c) Record Cost of services billed (d) Record Actual Service Overhead Required: a. Show labor and overhead cost flows through T-accounts. b. Prepare an income statement for the company for March.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 2PB: Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500...

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Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500 machine hours. The cost to make Job 416 is $95 in neon, 15 hours of labor at $13 per hour, and five machine hours. During the month, it incurs $95 in indirect material cost, $130 in administrative labor, $320 in utilities, and $350 in depreciation expense. What is the predetermined overhead rate if machine hours are considered the cost driver? What is the cost of Job 416? What is the overhead incurred during the month?
Acme Consulting uses job order costing to determine the cost of services provided to clients. For a particular year, Acme has budgeted the following amounts: Office rent and utilities $100,000 Support staff $70,000 Advertising $25,000 Supplies $5,000 Direct labor (based on 2.000 hours) $120,000 The firm has completed job 101 for a client. Job 101 involved 25 hours of direct labor. Acme assigns indirect costs based on direct labor hours. What is the cost of job 101? ANSWER $2,500 $4,000 $1,500 $5,000 I DON'T KNOW YET
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