TASK:
(Job Order cost system -provides product cost for each quantity of product that is manufactured)
Job Order Cost Accounting Entries for a Service Business
The law firm of Tilton and Henderson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during June:
June 4 - Charged 690 hours of professional (lawyer) time to the Rucker Co. breech of contract suit to prepare for the trial, at a rate , of $230 per hour.
June 8 - Reimbursed travel costs to employees for depositions related to the Rucker case, $18,900.
June 12 - Charged 310 hours of professional time for the Rucker trial at a rate of $260 per hour.
June 16 - Received invoice from consultants Wenzel and Lachgar for $72,900 for expert testimony related to the Rucker trial.
June 24 - Applied office overhead at a rate of $75 per professional hour charged to the Rucker case.
June 30 - Paid secretarial and administrative salaries of $53,300 for the month.
June 30 - Used office supplies for the month, $18,000.
June 30 - Paid professional salaries of $161,900 for the month.
June 30 -Billed Rucker $462,800 for successful defense of the case.
a. Provide the journal entries for each of the above transactions
b. How much office overhead is over- or underapplied? Enter amounts as positive numbers.
c. Determine the gross profit on the Liddy case, assuming that over- or underapplied office overhead is closed monthly to cost of services.