Job Order Cost Accounting Entries for a Service Business

The Ad Guys Inc. provides advertising services for clients across the nation. The Ad Guys is presently working on four projects, each for a different client. The Ad Guys accumulatescosts for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 60% of media purchases.

On June 1, the four advertising projects had the following accumulated costs:

	June 1 Balances
Clinton Bank	$88,800
Pryor Airlines	26,600
O'Ryan Hotels	62,200
Marshall Beverages	38,200

During June, The Ad Guys incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:

	Direct Labor		Media Purchases
Clinton Bank	$58,300		$225,800
Pryor Airlines	26,000		198,700
O'Ryan Hotels	114,600		145,100
Marshall Beverages	130,500		108,400
Total	$329,400		$678,000

At the end of June, both the Clinton Bank and Pryor Airlines campaigns were completed. The costs of completed campaigns are added to the cost of services account.

Determine each of the following for the month:

a. Direct labor costs. $

b. Media purchases. $

c. Overhead applied. $

d. Cost of completed Clinton Bank and Pryor Airlines campaigns.

	Total Costs
Clinton Bank	$
Pryor Airlines	$