Question 1

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 675 hours for Gigantic Drydocks. AB bills clients at the rate of $517 per hour, labor cost for its professional staff is $210 per hour. Overhead costs In March totaled $41.450. Overhead is applied to clients at $44 per labor-hour. In addition, AB had $198.700 in marketing and administrative costs. All transactions are on account. All services were billed. (b) Transaction Description (a) Record Labor cost Record Applied Service Overhead (c) 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. 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 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 Beg bal Work-In-Process Beg bal End. bal End. bal Cost of Services Billed Service Overhead Control Beg bal. Beg. bal. End. bal. End, bal Applied Service O.H. Beg bal. End bal.