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 40% of media purchases. On April 1, the four advertising projects had the following accumulated costs:
April 1 Balances
First Bank ........ $40,000
Reliable Airlines ..... 18,000
Motel 26 ......... 33,000
Blue Mountain Beverages . 27,000

During April, Media Connect incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:

At the end of April, both the First Bank and Reliable Airlines campaigns were completed. The costs of completed campaigns are added to the cost of services account.
Determine each of the following for the month:
a. Direct labor costs.
b. Media purchases.
c. Overhead applied.
d. Cost of completed First Bank and Reliable Airlinescampaigns.

  • CreatedFebruary 04, 2014
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