Question
TechMaster is an information technology (IT) consulting company offering services to small firms. TechMaster bills clients for its various services based on the hours its
TechMaster is an information technology (IT) consulting company offering services to small firms. TechMaster bills clients for its various services based on the hours its professionals spend. In August, IT professionals billed 960 hours to clients and worked a total of 1,090 hours (the difference includes time for training, preparing bids, and so on, which are considered administrative costs). TechMaster bills clients at the rate of $270 per hour; labor cost for its IT professionals is $95 per hour. Overhead costs in August totaled $52,000. Overhead is applied to clients at $57 per labor-hour. In addition, TechMaster had $72,000 in marketing and administrative costs (including labor time as described). 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 August.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started