Job-order costing in a service company Navasota Consulting provides financial and estate planning services on a retainer

Question:

Job-order costing in a service company Navasota Consulting provides financial and estate planning services on a retainer basis for the executive officers of its corporate clients. It incurred the following labor costs on services for three corporate clients during March 2011.

Direct Labor Contract 1 $14,000 7,200 28,800 $50,000 Contract 2 Contract3 Total

Navasota allocated March overhead costs of $22,000 to the contracts based on the amount of direct labor costs incurred on each contract.
Required
a. Assuming the revenue from Contract 3 was $70,000, what amount of income did Navasota earn from this contract?
b. Based on the preceding information, will Navasota report finished goods inventory on its balance sheet for Contract 1? If so, what is the amount of this inventory? If not, explain why not.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...