Question
Job Order Cost Accounting for a Service Company The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order
Job Order Cost Accounting for a Service Company
The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July:
July 3. | Charged 480 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $150 per hour. |
10. | Reimbursed travel costs to employees for depositions related to the Obsidian case, $22,100. |
14. | Charged 330 hours of professional time for the Obsidian trial at a rate of $270 per hour. |
18. | Received invoice from consultants Wadsley and Harden for $69,800 for expert testimony related to the Obsidian trial. |
27. | Applied office overhead at a rate of $75 per professional hour charged to the Obsidian case. |
31. | Paid administrative and support salaries of $43,100 for the month. |
31. | Used office supplies for the month, $14,600. |
31. | Paid professional salaries of $159,900 for the month. |
31. | Billed Obsidian $357,300 for successful defense of the case. |
a. Provide the journal entries for each of these transactions. If an amount box does not require an entry, leave it blank.
b. How much office overhead is over- or underapplied? Enter your answer as a positive number.
c. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.
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