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Question - Lake Country Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances. Lake Country has four public relations specialists plus an office staff.
At the beginning of the year, Lake Country estimated the total cost of salaries and benefits for the public relations specialists at $684,000 and a total of 7600 billable hours for the year. The office and administrative costs were estimated at $418,000. The allocation base for office and administrative costs is billable hours.
In June, Lake Country signed a contract for a Russian ballet performance. It negotiated a price of $6500 for its services. When the job was complete, Lake Country's records showed that it had logged 36.0 billable hours. What was the amount of gross profit that Lake Country made on the job?
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