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Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993 Exercise 5
Job Costing in a Service Organization
For August, Royal Consulting and Mediation Practice (RCMP) worked 900 hours for Alberta Company and 2,100 hours for Ontario Corporation. RCMP bills clients at the rate of $210 per hour; labor cost for its consulting staff is $105 per hour. The total number of hours worked in September was 3,000, and overhead costs were $30,000. Overhead is applied to clients at $18 per labor-hour. In addition, RCMP had $126,000 in marketing and administrative costs. All transactions are on account. All services were billed.
Required
a. Show labor and overhead cost flows through T-accounts.
b. Prepare an income statement for the company for August.
For August, Royal Consulting and Mediation Practice (RCMP) worked 900 hours for Alberta Company and 2,100 hours for Ontario Corporation. RCMP bills clients at the rate of $210 per hour; labor cost for its consulting staff is $105 per hour. The total number of hours worked in September was 3,000, and overhead costs were $30,000. Overhead is applied to clients at $18 per labor-hour. In addition, RCMP had $126,000 in marketing and administrative costs. All transactions are on account. All services were billed.
Required
a. Show labor and overhead cost flows through T-accounts.
b. Prepare an income statement for the company for August.
Explanation
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a.
Labor and overhead cost flows through...
Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
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