90.2K

Verified Solution

Link Copied!

Project Description:

Youth Athletic Services (YAS) provides adult supervision for organized youth athletics. It has a president, William Mayes, and five employees. He and one of the other five employees manage all marketing and administrative duties. The remaining four employees work directly on operations. YAS has four service departments: managing, officiating, training, and dispute resolution. A time card is marked and records are kept to monitor the time each employee spends working in each department. When business is slow, there is idle time, which is marked on the time card. (It is necessary to have some idle time because some direct labor-hours must be available to accommodate fluctuating peak demand periods throughout the day and the week.)

Some of the July operating data are as follows:

	Idle Time	Managing	Officiating	Training	Dispute Resolution
Sales revenue		$8,850	$9,800	$4,400	$2,100
Direct labor (in hours)	25	320	110	155	120
Direct overhead traceable to departments:
Equipment		$1,140	$1,065	$890	$15
Supplies		$390	$490	$440	$390
Transportation		$565	$1,190	$275	$80

Other Data:

• The four employees working in the operating departments all make $18 per hour.
• The fifth employee, who helps manage marketing and administrative duties, earns $3,200 per month, and William earns $3,950 per month.
• Indirect overhead amounted to $1,168 and is assigned to departments based on the number of direct labor-hours used. Because there are idle hours, some overhead will not be assigned to a department.
• In addition to salaries paid, marketing costs for items, such as advertising and special promotions totaled $790.
• In addition to salaries paid, other administrative costs were $320.
• All revenue transactions are cash; all others are on account.
• No inventories are kept.

Management wants to know whether each department is contributing to the companys profit. Prepare an income statement for July that shows the revenue and cost of services for each department. To get more information on Job Costing in service organizations, refer to your textbook (Chapter 7 pp. 286, 296-298).

YOUTH ATHLETIC SERVICES
INCOME STATEMENT
For Month Ending July 31
	Managing	Officiating	Training	Dispute Resolution	Total
Revenue
Cost of Services:
Labor
Direct Overhead
Indirect Overhead
Total costs of services
Department margin
Less other costs:
Unassigned labor costs
Unassigned overhead indirect costs
Marketing and administrative costs
Operating profit (loss)

Answer & Explanation Solved by verified expert

See Answer