3 Exercise 7-42 (Algo) Job Costing in a Service Organization (LO 7-4) Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 442 hours for Massive Airframes and 666 hours for Gigantic Drydocks. AB bills clients at the rate of $507 per hour; labor cost for its professional staff is $210 per hour. Overhead costs in March totaled $41,720. Overhead is applied to clients at $45 per labor-hour. In addition, AB had $198,600 in marketing and administrative costs. All transactions are on account. All services were billed. Transaction Description (a) Record Labor cost (b) Record Applied Service Overhead (0) Record Cost of services billed (d) Record Actual Service Overhead Required: a. Show labor and overhead cost flows through T-accounts. b. Prepare an income statement for the company for March. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Show labor and overhe cost flows through T-accounts Beg. bal. Wages Payable 0 232,680 (a) 232,680 Beg. bal. (a) Work-In-Process 0 232,680 282,270 X (c) 49,590 % 99,180 End. bal. End, bal. MA 3 a. Show labor and overeau COST HIOWS mrougn l-accounts. b. Prepare an income statement for the company for March. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Show labor and overhead cost flows through T-accounts. Wages Payable 0 Beg. bal. Beg. bal. (a) 232,680 (a) 232,680 Work-In-Process 0 0 232,680 282,270 X (c) 49,590 X 99.180 End. bal. End, bal. Cost of Services Billed Beg. bal. Beg. bal. (c) 0 282,270 X Service Overhead Control 0 41,720 41,720 (d) 7,870 (d) x x End. bal. . 274,400 End. bal. 0 Beg. bal. Applied Service O.H. 0 49,590 X 49,590 End. bal. 3 (c) (d) Record Cost of services billed Record Actual Service Overhead Required: a. Show labor and overhead cost flows through T-accounts. b. Prepare an income statement for the company for March. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare an income statement for the company for March. ALLOCATION BUSTERS Income Statement For the Month Ended March 31 Service revenue $ 561,756 Cost of services billed $ 282,270 X Subtract: Overapplied service overhead 7.870 X 274,400 Gross margin $ 287,356 Marketing and administration 198,600 Operating profit 88,756