ob Order Cost Accounting Entries for a Service Business Media Connect Inc. provi

Question

ob Order Cost Accounting Entries for a Service Business Media Connect Inc. provides advertising services for clients across the nation. Media Connect is presently working on four projects, each for a different client. Media Connect accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 55% of media purchases. On April 1, the four advertising projects had the following accumulated costs April 1 Balances First Bank Reliable Airlines Motel 26 Blue Mountain Beverages $87,600 26,300 61,300 37,700 During April, Media Connect incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: First Bank Reliable Airlines Motel 26 Blue Mountain Beverages Direct Labor $57,400 25,600 112,800 128,300 Media Purchases $224,400 197,500 144,200 107,900

Explanation / Answer

a) Direct labour cost = 324100

b) Media purchase = 674000

c) Overhead applied = 674000*55% = 370700

d) Cost of completed first bank and reliable airlines campaigns :

First bank Reliable airlines Beginning work in process 87600 26300 Media purchase 224400 197500 Direct labour 57400 25600 Overhead applied 123420 108625 Total cost 492820 358025

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