A public accounting firm employs 10 full-time professionals who provide services to clients.All professional labour compensation is traced directly to clients on a per professional labour-hour basis.Any other costs are included in a single indirect-cost pool (same as overhead)and allocated to individual clients according to billable professional labour-hours.
Operating costs and data for the year included the following:
Required:
a.By how much,if any,was the overhead cost underapplied or overapplied?
b.Prepare a summary journal entry to close any underapplied or overapplied overhead cost to a Cost of Services Provided account.
c.Explain qualitatively and quantitatively (in as much detail as possible)the source(s)of any underapplied or overapplied overhead cost.

Question

A public accounting firm employs 10 full-time professionals who provide services to clients.All professional labour compensation is traced directly to clients on a per professional labour-hour basis.Any other costs are included in a single indirect-cost pool (same as overhead)and allocated to individual clients according to billable professional labour-hours.
Operating costs and data for the year included the following:  
Required:
a.By how much,if any,was the overhead cost underapplied or overapplied?
b.Prepare a summary journal entry to close any underapplied or overapplied overhead cost to a Cost of Services Provided account.
c.Explain qualitatively and quantitatively (in as much detail as possible)the source(s)of any underapplied or overapplied overhead cost.

Quizplus · Accepted Answer

The Answer of A public accounting firm employs 10 full-time professionals who provide services to clients.All professional labour compensation is traced directly to clients on a per professional labour-hour basis.Any other costs are included in a single indirect-cost pool (same as overhead)and allocated to individual clients according to billable professional labour-hours.
Operating costs and data for the year included the following:  
Required:
a.By how much,if any,was the overhead cost underapplied or overapplied?
b.Prepare a summary journal entry to close any underapplied or overapplied overhead cost to a Cost of Services Provided account.
c.Explain qualitatively and quantitatively (in as much detail as possible)the source(s)of any underapplied or overapplied overhead cost.

A Public Accounting Firm Employs 10 Full-Time Professionals Who Provide