How much office overhead is over or underapplied

Assignment Help Accounting Basics

Reference no: EM131900570

Problem

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:

Jul. 3 Charged 170 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $155 per hour.

10 Reimbursed travel costs to employees for depositions related to the Obsidian case, $12,350.

14 Charged 270 hours of professional time for the Obsidian trial at a rate of $185 per hour.

18 Received invoice from consultants Wadsley and Harden for $30,550 for expert testimony related to the Obsidian trial.

27 Applied office overhead at a rate of $59 per professional hour charged to the Obsidian case.

31 Paid administrative and support salaries of $28,410 for the month.

31 Used office supplies for the month, $4,230.

31 Paid professional salaries of $76,300 for the month.

31 Billed Obsidian $192,200 for successful defense of the case.

Required:

A. Provide the journal entries for each of these transactions. Refer to the Chart of Accounts for exact wording of account titles.

B. How much office overhead is over- or underapplied?

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

Reference no: EM131900570

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