for september Twiddle and company worked 600 hours for client A and 1400 hoursfo

Question

for september Twiddle and company worked 600 hours for client A and 1400 hoursfor client B twiddle bills clients at rate of $ 140 per hour, labour cost for its audit staff is $ 70 per hour the totalnumber of hour worked in september was 2000 and actual overhead costs were $ 20000 overhead is applied to client at 12 $ per hour in addition Twiddle had $ 84000 in selling and admin costs all transaction are on account all services were billed

required prepare income statment for the company for september

Explanation / Answer

Hi,

Please find the answer as follows:

Income Statement


Sales (2000*140) 280000 Less : Cost of services billed -164000 Add: Overapplied service overhead (24000 - 20000) 4000 Gross Margin 120000 Selling and administration 84000 Operating Profit/Income 36000

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