Sweeten Company had no jobs in progress at the beginning of March and no beginni
ID: 2425794 • Letter: S
Question
Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. It started only two jobs during March-Job P and Job Q. Job P was completed and sold by the end of the March and Job Q was incomplete at the end of the March. The company uses a plantwide predetermined overhead rate based on direct labor-hours. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March): Assume the ending raw materials inventory is $1,000 and the company does not use any indirect materials. Required: Prepare the journal entry to transfer costs from Finished Goods to Cost of Goods Sold.Explanation / Answer
The estimated Total Manufacturing Overhead is calcualted as under
Total Fixed Overhead= $10,000
Estimated Variable Manufactruing Overhead= 2000*1
=$2000
Estimated Total Manufacuring Cost=$10000+$2000=$12,000
Predetermined Overhead Rate= Total Manufacruring Overhead/Estimated Labours
=$12000/2000
$6 Per Labour hour
Job P Manufacturing Overhead applied= ($6*1400 Direct Labour Hour)
=$8400
Job Q Manufacturing Overhead applied= ($6*500 Direct Labour Hours)
=$3000
Total Manufacturing Overhead applied= $11,400
Ending Workin Process Inventory= ($8000+$7500+$3000)
=$18500
Journal Entry would be
Cost of Goods Sold $18500
Finished goods Inventory $18500
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