A public accounting firm employs 10 full-time professionals who provide services to clients. All professional labour compensation
Question:
A public accounting firm employs 10 full-time professionals who provide services to clients. All professional labour compensation is traced directly to clients on a per professional labour-hour basis. Any other costs are Included in a single Indirect-cost pool (same as overhead) and allocated to individual clients according to billable professional labour-hours.
Operating costs and data for the year included the following:
Required:
1. Calculate the amount of overhead cost underapplied or overapplied.
2. Prepare a summary journal entry to close any underapplied or overapplied overhead cost to a Cost of Services Provided account (similar to Cost of Goods Sold account for a manufacturing company).
3. Explain why overhead was either underapplied or overapplied.
Operations Management in the Supply Chain Decisions and Cases
ISBN: 978-0073525242
6th edition
Authors: Roger Schroeder, M. Johnny Rungtusanatham, Susan Goldstein