Concept explainers
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).
On August 1, the four advertising projects had the following accumulated costs:
August 1 Balances | ||
Vault Bank | $62,200 | |
Take Off Airlines | 18,700 | |
Sleepy Tired Hotels | 43,500 | |
Tastee Beverages | 26,700 | |
Total | $151,100 |
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 | $41,600 | $157,800 | ||
Take Off Airlines | 18,600 | 138,900 | ||
Sleepy Tired Hotels | 81,800 | 101,400 | ||
Tastee Beverages | 93,100 | 75,900 | ||
Total | $235,100 | $474,000 |
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.
a)Journalize the summary entry to record the direct labor costs for the month.
b)Journalize the summary entry to record the media purchases for the month.
c) Journalize the summary entry to record the overhead applied for the month.
d)Journalize the summary entry to record the completion of Vault Bank and Take Off Airlines for the month.
This question provides that Overhead is 50% of the media purchase and asking the journal entries for Labor, Media Purchase, overhead, and completion of Vault Bank and Take Off Airlines record for the month as per given data.
Trending nowThis is a popular solution!
Step by stepSolved in 6 steps
- Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT HR Publishing Binding IT tickets 0 1,500 2,400 2,100 Employees 16 0 24 40 Department direct costs $150,000 $247,500 $430,000 $390,000 Required: Use the direct method to allocate these service department costs to the operating departments. Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Round "Publishing" and "Binding" answers to 2 decimal places. IT HR Publishing Binding Service Department Costs IT Allocation HR Allocation Total Costs Allocated $ $ $ $arrow_forwardJob costing; actual, normal, and variation from normal costing. Cheney & Partners, a Quebec based public accounting partnership, specializes in audit services. Its job-costing system has a single direct-cost category (professional labor) and a single indirect-cost pool (audit support, which contains all costs of the Audit Support Department). Audit support costs are allocated to individual jobs using actual professional labor-hours. Cheney & Partners employs 10 professionals to perform audit services.arrow_forwardJob Costs Using Activity-Based Costing Heitger Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Heitger identified three overhead activities and related drivers. Budgeted information for the year is as follows: Activity Cost Driver Amount of Driver Materials handling $ 72,000 Number of moves 3,000 Engineering 165,000 Number of change orders 10,000 Other overhead 280,000 Direct labor hours 50,000 Heitger worked on four jobs in July. Data are as follows: Job 13-43 Job 13-44 Job 13-45 Job 13-46 Beginning balance $20,300 $19,800 $2,300 $0 Direct materials $6,500 $8,900 $12,700 $9,800 Direct labor cost $18,000 $20,000 $32,000 $2,400 Job 13-43 Job 13-44 Job 13-45 Job 13-46 Number of moves 44 52 29 5 Number of change orders 30 40 20 20 Direct labor hours 900 1,000 1,600 120 By July 31, Jobs 13-43 and 13-44 were completed and sold. Jobs 13-45 and 13-46 were still in process.…arrow_forward
- True/false 1) Activity-based costing information is recorded on a job sheet each month which is later posted to the general ledger at the end of the year. ________ 2. A factory production manager’s salary is considered an organizational sustaining activity cost. ________ 3. First stage allocation is the process by which overhead costs are assigned to activity cost pools in an activity-based costing system. ________ 4. Interviewing operating-level managers is a poor way of determining cost pools in first-stage allocation. ________ 5. Production accountants applying activity rates to cost pools in activity-based costing will be able to calculate standard costs. ________ 6. The process of budgeting often takes place during the process of evaluation. ________ 7. Preparation of the cash budget often precedes the preparation of the sales budget. ________ 8. The self-imposed budget is the same as a top-down budget. ________ 9. The Chief Executive Officer of a corporation…arrow_forwardBaldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Costs Personnel Legal Complete this question by entering your answers in the tabs below. Total Personnel $ Personnel $ 10,800 $ 320,000 Required: a. Allocate the cost of the service departments to the operating divisions using the direct method. b. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. c. Allocate the cost of the service departments to the operating divisions using the reciprocal method. 320,000 $ 320,000 $ Required A Required B Required C Allocate the cost of the service departments to the operating divisions using the reciprocal method. Note: Do not round intermediate calculations. Round your final answers…arrow_forwardMangiarrow_forward
- having trouble figuring out the Cost of Services? any advice? 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 65% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $270,000 Take Off Airlines 80,000 Sleepy Tired Hotels 210,000 Tastee Beverages 115,000 Total $675,000 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…arrow_forwardWhat is blank is what i need a detailed answer to please and thank you God blessarrow_forwardThornton Corporation's computer services department assists two operating departments in using the company's information system effectively. The annual cost of computer services is $626,200. The production department employs 37 employees, and the sales department employs 25 employees. Thornton uses the number of employees as the cost driver for allocating the cost of computer services to operating departments. Required Allocate the cost of computer services to operating departments. Department Allocated Cost Production Salesarrow_forward
- Assume a company's activity-based costing system Includes three activitles with the following activity rates: Activity Cost Pool Activity Rate $ 2 per mile driven $ 50 per delivery $ 22 per phone call Travel Deliveries Customer service Two of the company's many customers Include Customer A and Customer B. These two customers consumed the company's activitles as follows: Total Expected Activity Customer A Customer B Travel (number of miles driven) 300 250 Deliveries (number of deliveries) Customer service (number of phone calls) 15 5 20 12 How much total activity cost would be assigned to Customer A from the company's three activitles? Multiple Choice $1,680 $1,980 $1,790 $1,690arrow_forwardWoodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs a. The order of allocation starts with IT. b. The order of allocation starts with HR. IT Required A HR 1,200 0 0 16 $ 152,000 $ 249,600 Required: Use the step method to allocate the service costs, using the following: Required B Publishing 1,200 24 $430,000 Complete this question by entering your answers in the tabs below. X Answer is not complete. Use the step method to allocate the service costs, using the following: Binding Return to question 3,600 40 $ 390,000arrow_forwardJLR Enterprises provides consulting services throughout California and uses a job-order costing systemto accumulate the cost of client projects. Traceable costs are charged directly to individual clients; incontrast, other costs incurred by JLR, but not identifiable with specific clients, are charged to jobs byusing a predetermined overhead application rate. Clients are billed for directly chargeable costs, overhead,and a markup.JLR’s director of cost management, Brent Dean, anticipates the following costs for the upcomingyear:■ Problem 3–47Job-Order Costing in a ConsultingFirm(LO 3-1, 3-2, 3-4, 3-8)1. Traceable costs:$2,500,000CostPercentage of Cost DirectlyTraceable to ClientsProfessional staff salaries ................................ $2,500,000 ..................................... 80%Administrative support staff ............................. 300,000 ..................................... 60%Travel ................................................................ 250,000…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education