Job Costing in a Service Organization: For the month of September, Touche Andersen & Company worked 200 hours for client A and 700 hours for client B. Touche Andersen bills clients at the rate of $80 per hour, whereas the labor cost for its audit staff is $30 per hour. The total number of hours worked in September was 1,000 (100 hours were not billable to clients), and overhead costs were $10,000. (Examples of unbillable hours are hours spent in professional training and meetings unrelated to particular clients.) Overhead is as- signed to clients based proportionally on direct labor-hours, so client A was assigned $2,000, client B was assigned $7,000, and $1,000 remained unassigned. In addition. Touche Anderson & Company had $5,000 in marketing and administrative costs. All transactions are on account.

Required:

a. Using T-accounts, trace manufacturing costs and revenue flows.

b. Prepare a full absorption income statement for the company for September.