1. The Haskins Crew Co. provides advertising services for clients across the nat
ID: 342150 • Letter: 1
Question
1. The Haskins Crew Co. provides advertising services for clients across the nations. The Haskins Crew Co. is presently working on four projects, each for a different client. The Haskins Crew 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 purchase.The predetermined Overhead is 60% of media purchases.
September 1, the four advertising projects had the following accumulated costs:
Sept 1 Balance
SBH Auto Group $120,000
Feel Good Chairs, Inc 36,000
Bounce-A-Lot Trampolines 84,000
Hyped up Beverages 1,000
Total $241,000
During September, the Haskins Crew incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:
Direct Labor Media Purchases
SBH Auto Group $84,000 $315,000
Feel Good Chairs, Inc 37,500 277,500
Bounce-A-Lot Trampolines 165,000 202,500
Hyped up Beverages 187,500 151,500
$474,000 $946,500
end At the end of September, both the SBH Auto Group & the Bounce-A-Lot Trampolines campaigns were completed. The costs of completed campaigns are debited to the cost of services account.
a. Prepare the journal entries for the following
a. Direct labor costs
b. Media purchases
c. Overhead applied
d. Completion of SBH Auto Group & the Bounce-A-Lot Trampolines campaigns
b. Prepare a schedule of unfinished jobs to support the balance in the work in process account.
Explanation / Answer
a.
b.
Working:
Transaction Account Titles and Explanation Debit Credit a. Work in process 474000 Salaries payable 474000 (To record direct labor costs incurred) b. Work in process 946500 Accounts payable 946500 (To record media purchase costs incurred) c. Work in process (60% x $946500) 567900 Overheads 567900 (To record overhead applied) d. Cost of services ($708000 + $573000) 1281000 Work in process 1281000 (To reocrd completion of projects)Related Questions
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