For August, Royal Consulting and Mediation Practice (RCMP) worked 800 hours for Alberta Company and 1,700 hours for Ontario Corporation. RCMP bills clients at the rate of $540 per hour; labor cost for its consulting staff is $340 per hour. The total number of hours worked in August was 2,500, and overhead costs were $54,000. Overhead is applied to clients at $27 per labor-hour. In addition, RCMP had $310,000 in marketing and administrative costs. 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.
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