Reference no: EM13571647

 

Viva Marketing, Ltd., produces television advertisements for businesses that are marketing products in the western provinces of Canada. To achieve cost control, Viva Marketing uses a job cost system similar to that found in a manufacturing organization.

It uses some different account titles:

Account -------- Replaces

Videos-in-Process ------ Work-in-Process

Video Supplies Inventory ----- Manufacturing Supplies Inventory

Cost of Videos Completed ------ Cost of Goods Sold

Accumulated Depreciation, Studia Assets ------ Accumulated Depreciation, Factory Assets

Studio Overhead ------ Manufacturing Overhead

Viva Marketing does not maintain Raw Materials or Finished Goods Inventory accounts. Materials, such as props needed for videos, are purchased as needed from outside sources and charged directly to Videos-in-Process and the appropriate job. Videos are delivered directly to clients upon completion.

The October 1, balances were as follows:

Video Supplies ------ $300

Videos-in-Process ------ 1,000

Studio Overhead ----- 250

During Octobver, Viva Marketing completed the following production transactions:

1. Purchased video supplies costing $1,475 on account.

2. Purchased materials for specific jobs costing $27,000 on account.

3. Incurred direct labor costs of $65,000 and indirect labor costs of $3,200.

4. Used production supplies costing $850.

5. Recorded studio depreciation of $3,000

6. Incurred miscellaneous payables for studio overhead of $1,800

7. Applied studio overhead at a predetermined rate of $18 per studio hour, with 480 studio hours.

8. Completed jobs costinf $100,000 and delivered them directly to clients.

Required

a. Prepare "T" accounts showing the flow of costs through all service accounts and Cost of Videos Completed.

b. Calculate the cost incurred as of the end of October for the incomplete jobs still in process.