Job Order Costing for a Service Company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs 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 45% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances Vault Bank $63,300 Take Off Airlines 19,000 Sleepy Tired Hotels 44,300 Tastee Beverages 27,200 $153,800 Total During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Direct Labor $45,000 Media Purchases $162,200 Vault Bank Take Off Airlines 20,100 142,700 Sleepy Tired Hotels 88,600 104,200 Tastee Beverages Total 100,800 $254,500 77,900 $487,000 At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account. a. Journalize the summary entry to record the direct labor costs for the month. If an amount box does not require an entry, leave it blank. a. Work in Process Salaries Payable 88 Feedback Check My Work a. Increase the work in process for the direct costs and the applied overhead. Applied overhead should be based on media purchases. Transfer the cost of completed jobs out of work-in-process and into the cost of services account. b. Journalize the summary entry to record the media purchases for the month. If an amount box does not require an entry, leave it blank. b. Work in Process Accounts Payable Feedback Check My Work 88 b. Increase the work in process for the direct costs and the applied overhead. Applied overhead should be based on media purchases. Transfer the cost of completed jobs out of work-in-process and into the cost of services account. c. Journalize the summary entry to record the overhead applied for the month. If an amount box does not require an entry, leave it blank. c. Work in Process Agency Overhead d. Journalize the summary entry to record the completion of Vault Bank and Take Off Airlines for the month. If an amount box does not require an entry, leave it blank. d. Cost of Services Work in Process