General ledger relationships, underallocation and overallocation, service industry. John Brody and Co. is an engineering consulting firm. Brody uses a variation of a normal costing system. It charges jobs for blueprints made and fees paid to outside experts at actual costs, professional direct labour costs at a budgeted direct labour rate, and engineering support overhead costs (for engineering and office support) at a budgeted indirect cost rate. Brody maintains a Jobs-in-Process Control account in its general ledger that accumu- lates all costs of jobs. As a job is completed, Brody immediately bills the client and transfers the costs of the completed job to the Cost of Jobs Billed account to be matched against the revenues billed to the client. Consequently, unlike manufacturing companies, Brody has no accounts that correspond to Materials Control and Finished Goods Control accounts. The following data pertain to the year 2010:

REQUIRED 1. Summarize the year 2010 transactions by preparing T-accounts for Jobs-in-Process Control, Cost of Jobs Billed, Direct Professional Labour Control, Direct Professional Labour Allocated, Engineering Support Overhead Control, Engineering Support Overhead Allocated, and Cash Control. As your final entry, dispose of the year-end underallocated or overallocated account balances as a direct write-off to Cost of Goods Sold.
2. Calculate Brody’s operating income for the year 2010.LO1

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Cost of jobs in process on January 1, 2010 Direct costs of fees and blueprints (all cash) Actual direct professional labour costs (all cash) Direct professional labour allocated at $82 per direct professional labour-hour Actual direct professional labour-hours Actual engineering support overhead costs (all cash) Engineering support overhead allocated at $0.75 per direct professional labour dollar incurred Cost of jobs billed Revenues Brody incurs no marketing and business development costs. $ 198,000 $ 210,000 $2,650,000 31,600 $1,963,000 $4,275,000 $5,985,000