Fogelin Promotional Services Uses a Job Order System for Costing

question 119

Multiple Choice

Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances. Fogelin has 4 public relations specialists, plus an office staff. At the beginning of 2014, Fogelin estimated the total cost of salaries and benefits for the public relations specialists at $676,800, and a total of 7,200 billable hours for the year. The office and administrative costs were estimated at $403,200. The allocation base for office and administrative costs is billable hours. In June, Fogelin signed a contract for a Russian ballet performance. They negotiated a price of $6,400 for their services. When the job was complete, Fogelin's records showed that they had logged 36.50 billable hours. What was the actual total cost of the job for Fogelin?

• A)$5,475
• B)$2,044
• C)$3,431
• D)$4,906

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Definitions:

Total Costs

The complete aggregation of all direct and indirect expenses incurred in the production or acquisition of goods and services.

Production Department

The segment of a manufacturing firm dedicated to producing finished goods from raw materials or components.

Support Department

Units within an organization that provide essential services or support to the production departments but are not directly involved in the primary business operations.

Diesel Engine

An internal combustion engine in which air is compressed to a high degree to ignite diesel fuel injected into the cylinder, used in most heavy-duty vehicles.