For August, Royal Consulting and Mediation Practice (RCMP) worked 900 hours for

Question

For August, Royal Consulting and Mediation Practice (RCMP) worked 900 hours for Alberta Company and 2,100 hours for Ontario Corporation. RCMP bills clients at the rate of $400 per hour; labor cost for its consulting staff is $200 per hour. The total number of hours worked in September was 3,000, and overhead costs were $60,000. Overhead is applied to clients at $24 per labor-hour. In addition, RCMP had $240,000 in marketing and administrative costs. All transactions are on account. All services were billed. Required: (a) Show labor and overhead cost flows through T-accounts. Wages Payable Work In Process 600,000 600,000 Cost of Services Billed Service Overhead Control

Explanation / Answer

Solution:

(A). Wage Payable:

Debit Credit

   Wages Expencess 6,00,000

Wages Payable 6,00,000

(B).   

Debit Credit

   Raw Material Inventory 6,00,000

   Work-in Process 6,00,000

(C). Over Head Applied: Debit Credit

Work in Process Inventory 3,000

Factory Over Head 3,000

(D). Service all Billed

   Service 2,40,000

   Cost 2,40,000

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