The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 65% of media purchases. On August 1, the four advertising projects had the following accumulated costs:
August 1 Balances
Vault Bank $270,000
Take Off Airlines 80,000
Sleepy Tired Hotels 210,000
Tastee Beverages 115,000
During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:
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