Exercise $7-45($Static$)$ Job Costing in a Service Organization $($LO $7-4)$

Farnsworth Executive Coaching $($FEC$)$ offers services to firms in advising executives on improving productivity and leadership. For August, FEC worked $660$ hours for Grace Corporation and $390$ hours for Temple Construction. In addition, FEC had small engagements with various clients totaling $125$ hours. FEC bills clients at the rate of $$600$ per hour; labor cost for its professional staff is $$275$ per hour. Overhead costs in August totaled $$73,200.$ Overhead is applied to clients at $$65$ per labor$-$hour. In addition, FEC had $$179,250$ in marketing and administrative costs. All transactions are on account. All services were billed.

Transaction Description

$($a$)$ Record labor cost

$($b$)$ Record applied service overhead

$($c$)$ Record cost of services billed

$($d$)$ Record actual Service overhead

Required:

Show labor and overhead cost flows through T$-$accounts.

Prepare an income statement for the company for August.