Reference no: EM132409487

Question

Job order cost accounting for a service company

The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July:

July 3.Charged 460 hours of professional (lawyer) time at a rate of $150 per hour to the Obsidian Co. breech of contract suit to prepare for the trial10.Reimbursed travel costs to employees for depositions related to the Obsidian case, $25,40014.Charged 190 hours of professional time for the Obsidian trial at a rate of $290 per hour18.

Received invoice from consultants Wadsley and Harden for $49,700 for expert testimony related to the Obsidian trial27.Applied office overhead at a rate of $70 per professional hour charged to the Obsidian case31.Paid administrative and support salaries of $32,300 for the month31.Used office supplies for the month, $10,90031.Paid professional salaries of $166,300 for the month31.Billed Obsidian $278,800 for successful defense of the case

Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services?