Question

Service Cost Flows Vente Marketing, Ltd., produces television advertisements for businesses that are marketing products in...

Service Cost Flows
Vente Marketing, Ltd., produces television advertisements for businesses that are marketing products in the western provinces of Canada. To achieve cost control, Vente Marketing uses a job cost system similar to that found in a manufacturing organization. It uses some different account titles:

Account Replaces
Videos-in-Process Work-in-Process
Video Supplies Inventory Manufacturing Supplies Inventory
Cost of Videos Completed Cost of Goods Sold
Accumulated Depreciation, Studio Assets Accumulated Depreciation, Factory Assets
Studio Overhead Manufacturing Overhead

Vente Marketing does not maintain Raw Materials or Finished Goods Inventory accounts. Materials, such as props needed for videos, are purchased as needed from outside sources and charged directly to Videos-in-Process and the appropriate job. Videos are delivered directly to clients upon completion. The April 1, balances were as follows:

Video Supplies $1,300
Videos-in-Process 2,000
Studio Overhead 250 underapplied

During April, Vente Marketing completed the following production transactions:
1. Purchased video supplies costing $1,860 on account.
2. Purchased material for specific jobs costing $31,000 on account.
3. Incurred direct labor costs of $65,000 and indirect labor costs of $3,100.
4. Used production supplies costing $1,250.
5. Recorded studio depreciation of $7,500.
6. Incurred miscellaneous payables for studio overhead of $2,200.
7. Applied studio overhead at a predetermined rate of $22 per studio hour, with 520 studio hours.
8. Completed jobs costing $104,000 and delivered them directly to clients.

(a.) Prepare "T" accounts showing the flow of costs through all service accounts and Cost of Videos Completed.

Videos-in-Process
Bal.

2,000

Answer
Answer Answer
Answer Answer
Answer Answer
Other Payables
Answer Answer
Answer Answer
Cost of Videos Completed
Answer Answer
Answer Answer
Answer Answer
Videos Supplies Inventory
Bal.

1,300

Answer
Answer Answer
Studio Overhead
Bal.

250

Answer
Answer Answer
Answer Answer
Answer Answer
Answer Answer
Accounts Payable
Answer Answer
Answer Answer
Wages Payable
Answer Answer
Answer Answer
Accumulated Depreciation-Studio Assets
Answer Answer
Answer Answer


(b.) Calculate the cost incurred as of the end of Apirl for the incompete jobs still in process.
$Answer

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Homework Answers

Answer #1

(a)

Videos-in-Process
Bal. 2000 104000
31000 0
65000 0
11440 0
Other Payables
0 2200
0 0
Cost of Videos Completed
104000 0
0 0
0 0
Videos Supplies Inventory
Bal. 1300 1250
1860 0
Studio Overhead
Bal. 250 11440
3100 0
1250 0
7500 0
2200 0
Accounts Payable
0 1860
0 31000
Wages Payable
0 68100
0 0
Accumulated Depreciation-Studio Assets
0 7500
0 0

7. Studio overhead applied = 520 x $22 = $11440

(b) Cost incurred as of end of April for the incomplete jobs still in process = $2000 + $31000 + $65000 + $11440 - $104000 = $5440

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