Question
Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 459
Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 459 hours for Massive Airframes and 679 hours for Gigantic Drydocks. AB bills clients at the rate of $502 per hour; labor cost for its professional staff is $200 per hour. Overhead costs in March totaled $41,870. Overhead is applied to clients at $44 per labor-hour. In addition, AB had $198,900 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 |
| (c) | 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.
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
