Allocation Busters (AB) is a dispute mediation firm offering services to firms i

Question

Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 455 hours for Massive Airframes and 675 hours for Gigantic Drydocks. AB bills clients at the rate of $508 per hour, labor cost for its professional staff is $220 per hour. Overhead costs in March totaled $41,980. Overhead is applied to clients at $45 per labor-hour. In addition, AB had $199,800 in marketing and administrative costs. All transactions are on account. All services were biled Record Labor cost Record Applied Service Overhead Record Cost of services billed (d) Record Actual Service Overhead Required: a. Show labor and overhead cost flows through T-accounts. Wages Payable Work-In-Process Beg. ba Beg. bal. End bal. End. bal Cost of Services Billed Service Overhead Control Beg ball Beg bal End. bal. End. bal Applied Service O.H Beg bal

Explanation / Answer

a Wages payable Account description Amt Beg bal. $                 -   Massive Airframes $      100,100 (455 hours * $220/hour) Gigantic Drydocks $      148,500 (675 hours * $220/hour) $      248,600 Cost of Services billed Account description Amt Beg bal. $                 -   Massive Airframes $      100,100 (455 hours * $220/hour) Gigantic Drydocks $      148,500 (675 hours * $220/hour) $      248,600 Applied Services OH Account description Amt Beg bal. $                 -   Massive Airframes $         20,475 (455 hours * $45/hour) Gigantic Drydocks $         30,375 (675 hours * $45/hour) $        50,850 Services OH Control Account description Amt Beg bal. $                 -   Marketing & Admininstrative cost $      199,800 $      199,800 b ALLOCATION BUSTERS INCOME STATEMENT FOR THE MONTH ENDED MARCH'31 Revenue Massive Airframes (455 hours * $508/hour) $      231,140 Gigantic Drydocks (675 hours * $508/hour) $      342,900 $ 574,040 Less Expenditure Wages Payable $      248,600 Applied Service OH $         50,850 Marketing & Admininstrative cost $      199,800 $ 499,250 $   74,790

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