7774 Study Guide - Final Guide: Open Government, All England Law Reports, Salemi
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The law firm of Furlan and Benson accumulates costs associatedwith individual cases, using a job order cost system
A type of cost accounting system that provides for a separaterecord of the cost of each particular quantity of product thatpasses through the factory.
. The following transactions occurred during July:
Jul. | 3 | Charged 175 hours of professional (lawyer) time to the ObsidianCo. breech of contract suit to prepare for the trial, at a rate of$150 per hour. |
10 | Reimbursed travel costs to employees for depositions related tothe Obsidian case, $12,500. | |
14 | Charged 260 hours of professional time for the Obsidian trialat a rate of $185 per hour. | |
18 | Received invoice from consultants Wadsley and Harden for$30,000 for expert testimony related to the Obsidian trial. | |
27 | Applied office overhead at a rate of $62 per professional hourcharged to the Obsidian case. | |
31 | Paid administrative and support salaries of $28,500 for themonth. | |
31 | Used office supplies for the month, $4,000. | |
31 | Paid professional salaries of $74,350 for the month. | |
31 | Billed Obsidian $172,500 for successful defense of thecase. |
Required:
A. | Provide the journal entries for each of these transactions.Refer to the Chart of Accounts for exact wording of accounttitles. |
B. | How much office overhead is over- or underapplied? |
C. | Determine the gross profit on the Obsidian case, assuming thatover- or underapplied office overhead is closed monthly to cost ofservices. |
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Chart of Accounts
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Journal
A. Provide the journal entries for each of these transactions.Refer to the Chart of Accounts for exact wording of accounttitles.
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JOURNAL
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Solution
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Final Question
B. How much office overhead is over- or underapplied?
selector 1
Overapplied
Underapplied
Points:
C. Determine the gross profit on the Obsidian case, assumingthat over- or underapplied office overhead is closed monthly tocost of services.
How much office overhead is over- or underapplied?
selector 1
Overapplied
Underapplied
Points:
C. Determine the gross profit on the Obsidian case, assumingthat over- or underapplied office overhead is closed monthly tocost of services.