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TechMaster is an information technology (IT) consulting company offering services to small firms. TechMaster bills clients...

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Accounting

TechMaster is an information technology (IT) consulting companyoffering services to small firms. TechMaster bills clients for itsvarious services based on the hours its professionals spend. InAugust, IT professionals billed 880 hours to clients and worked atotal of 930 hours (the difference includes time for training,preparing bids, and so on, which are considered administrativecosts). TechMaster bills clients at the rate of $210 per hour;labor cost for its IT professionals is $80 per hour. Overhead costsin August totaled $36,000. Overhead is applied to clients at $46per labor-hour. In addition, TechMaster had $56,000 in marketingand administrative costs (including labor time as described). Alltransactions are on account. All services were billed.

TransactionDescription
(a)Record Labor cost
(b)Record Applied Service Overhead
(c)Record Cost of services billed
(d)Record Actual Service Overhead

Required:

a. Show labor and overhead cost flows throughT-accounts.

b. Prepare an income statement for the companyfor August.

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