Question

Job Order Cost Accounting for a Service Company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different dient. 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 60% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $87.500 26,300 Take Off Airlines 61,200 Sleepy Tired Hotels Tastee Beverages 37,600 3212,600 Total During kupust The Fly Company incurred the following director and media purchase costs related to preparing advertising for each of the four Direct Labor 352.900 Media Purchases 3324 000 25,100 Vault Bank Take OH Arnes Sleep Tired Hotels Tastee Beverages Tota 144.500 107.000 5575 000 140.700 3355 300 Press

Answer 1

Credit Debit $ 355,300 Date Account Titles and Explanation Aug-31 Work in process Salaries payable (To record the direct labor costs) $ 355,300 $ 675,000 Aug-31 Work in process Accounts Payable (To record the media purchases) $ 675,000 $ 405,000 Aug-31 Work in Process ($675,000*60%) Agency Overhead (To record the overhead applied) $ 405,000 $ 880,960 Aug-31 Cost of services ($510,080+370,880) work in process (To record the completion of services) $ 880,960

A B с 1 Working note: 2 Particulars Vault Bank Take off 3 August 1 accumulated costs $ 87,500 $ 26,300 4 Direct labor $ 62,900 $ 28,100 5 Media purchases $ 224,800 $ 197,800 6 Overhead $ 134,880 $ 118,680 7 Cost of completed service $ 510,080 $ 370,880

А B с 1 Working note: 2. Particulars Vault Bank Take off 3 August 1 accumulated costs 87500 26300 4 Direct labor 62900 28100 5 Media purchases 224800 197800 6 Overhead =+B5*60% =+C5*60% 7 Cost of completed service =SUM(B3:36) =SUM(C3:06)