**Rutland Business Services (RBS) Case Study**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. - **Billing and Costs:** - RBS bills clients at $560 an hour. - Labor costs are $145 an hour. - A total of 750 hours were worked in August, with 80 hours not billable to clients. - **Overhead Costs:** - Overhead costs of $75,000 were incurred and assigned to clients on the basis of direct labor-hours. - Some overhead was not assigned to jobs due to 80 non-billable hours. - RBS incurred $61,000 in marketing and administrative costs. - All transactions were on account.**Required Tasks:**a. **What are the revenue and cost per client?** - **Revenue and Costs Table:** | Client | Revenue | Labor Cost | Overhead | Margin | |----------------------------|----------|------------|----------|---------| | Selden Contracting | $151,200 | $39,150 | $27,000 | $85,050 | | Moenhart Insurance | $95,200 | $24,650 | $17,000 | $53,550 | | Englewood Medical Center | $128,800 | $33,350 | $23,000 | $72,450 |b. **Prepare an income statement for August.***Note: The income statement for August is not provided in the image and would involve further analysis based on the detailed financial data.* ### Rutland Business Services: Income Statement#### For the Month Ended August 31- **Revenue from Clients:** $375,200- **Less Cost of Services to Clients:** $0 - **Total Cost of Services to Clients:** $0- **Gross Margin:** $375,200- **Less Other Costs:** - **Labor:** $11,600 - **Overhead:** - **Marketing and Administrative Costs:** $61,000 - **Total Other Costs:** $72,600- **Operating Profit:** $302,600This income statement illustrates Rutland Business Services' financial performance for the specified month. Revenue generated from clients totals $375,200, with no costs attributed directly to services provided, resulting in a gross margin equal to the revenue. Other costs, including labor and marketing/administrative expenses, amount to $72,600. Deducting these from the gross margin results in an operating profit of $302,600.

Revenue: Revenue, often referred to as sales or income, is the total amount of money earned by a business from its primary activities, which may include selling goods or services to customers. It represents the inflow of assets into the business as a result of its operational activities. Costs: Costs in cost accounting refer to the expenses incurred by a business in its day-to-day operations to generate revenue. Costs can be categorized in various ways, depending on their nature and relevance to decision-making.Requirement 1:Determination of Revenue and Cost per client.DescriptionSelden ContractingMoenhart InsuranceEnglewood Medical CenterHours worked (A)270170230Revenue per hour (B)500500500Total revenue (C=A*B)13500085000115000Labor cost per hour (D)125125125Total labor cost (E=A*D)337502125028750Overhead cost per hour (F)808080Total overhead cost (G=A*F)216001360018400Total cost (E+G)553503485047150Overhead cost per hour=Total overhead cost÷Total hours worked=60000÷750=80per hourRequirement 2: RUTLAND BUSINESS SERVICESIncome StatementFor the Month Ended August 31Revenue from clients335000Less: Cost of services to clientsLabor83750Overhead53600Total cost of services to clients137350Gross margin197650Less: Other costsLabor10000Overhead6400Marketing and administrative costs57000Total other costs73400Operating profit124250DescriptionSelden ContractingMoenhart InsuranceEnglewood Medical CenterTotal revenue13500085000115000Total cost553503485047150Total operating profit Rutland Business Services (RBS) earned in August month is $124,250.

Business

Accounting

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 $560 an hour; its labor costs are $145 an hour. A total of 750 hours were worked in August with 80 hours not billable to clients. Overhead costs of $75,000 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 $61,000 in marketing and administrative costs. All transactions were on account. Required: a. What are the revenue and cost per client? b. Prepare an income statement for August. Complete this question by entering your answers in the tabs below. Required A Required B What are the revenue and cost per client? Revenue Labor Overhead Margin Selden Contracting Moenhart Insurance $ 151,200 $ 39,150 27,000 85,050 $ $ Englewood Medical Center $ 128,800 33,350 23,000 72,450 95,200 24,650 17,000 53,550 $ < Required A Required B >

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 $560 an hour; its labor costs are $145 an hour. A total of 750 hours were worked in August with 80 hours not billable to clients. Overhead costs of $75,000 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 $61,000 in marketing and administrative costs. All transactions were on account. Required: a. What are the revenue and cost per client? b. Prepare an income statement for August. Complete this question by entering your answers in the tabs below. Required A Required B What are the revenue and cost per client? Revenue Labor Overhead Margin Selden Contracting Moenhart Insurance $ 151,200 $ 39,150 27,000 85,050 $ $ Englewood Medical Center $ 128,800 33,350 23,000 72,450 95,200 24,650 17,000 53,550 $ < Required A Required B >

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 $545 an hour; its labor costs are $140 an hour. A total of 750 hours were worked in August with 80 hours not billable to clients. Overhead costs of $71,250 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 $60,000 in marketing and administrative costs. All transactions were on account. Required:What are the revenue and cost per client? Prepare an income statement for August.
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