Jarman consulting inc. provides financial and estate planning services on a retainer basis for the executive officers of is corporate clients. it incurred the following labor costs on services for three corporate clients during march 2006.
Driect labor
contract 1 $12,000
contact 2 $7,200
contract 3 28,800
Total $48,000
Jarman allocated March overhead costs of $21,600 to the contracts based on the amount of direct labor costs incurred on each contract.
A. assuming the revenue from contract 3 was $65,600 what amount of income did Jarman earn from this contract?
B. based on the preceding information, will Jarman report finished goods inventory on its balance sheet for contract 1? if so, what is the amount of this inventory? if not, explain why not.
1 answer