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Apply Overhead in a Service Company

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Figure out which amount of overhead cost would apply.

1. Compute the amount of overhead cost that would have been charged to each project during May.
2. Prepare a journal entry showing the completion of the Williams and Chandler projects and the transfer of costs to the Completed Projects (i.e., Finished Goods) account.
3. What is the balance in the Work in Process account at the end of the month?
4. What is the balance in the Overhead account at the end of the month? What is this balance called?

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Solution Summary

This tutorial provides guidelines on creating the journal entries for a service company.

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See Also This Related BrainMass Solution

Tahoma Corporation

Problem # 1
The following calendar year information about the Tahoma Corporation is available on December 31:

The company applies overhead on the basis of 125% of direct labor costs. Calculate the amount of over- or underapplied overhead.

Problem # 2
A company uses a process cost accounting system. The following information is available regarding direct labor for the current year:

(a) Calculate the equivalent units of production for direct labor for the year.
(b) Calculate the average cost per equivalent unit for direct labor (round to the nearest cent).

Problem # 3
A retail store has three departments, A, B, and C, each of which has four full-time employees. The store does general advertising that benefits all departments. Advertising expense totaled $90,000 for the current year, and departmental sales were:

How much advertising expense should be allocated to each department?

Problem #4
Texas Toys, a retail store, has four sales departments supported by three service departments. Cost and operational data for each department follow:

Determine the service department expenses to be allocated to Sales Department 1 for:
Advertising ___________________
Maintenance __________________
Purchasing ___________________

Thanks!

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