Madtack Company uses a job-order costing system and started the month of March w

Question

Madtack Company uses a job-order costing system and started the month of March with three jobs in process. The cost of beginning work in process plus the costs added during March are shown below: Job #359 Job #360 Job #361 beginning work in process ..... $3,500 $6,300 $4,800 COSTS ADDED DURING MARCH direct materials .............. $4,600 $3,300 $4,900 direct labor .................. 3,000 4,000 5,000 Madtack applies overhead to jobs at a rate of 125% of direct labor cost. During March, Madtack completed and sold Job #360. Job #361 was also completed but was not sold by the end of March. Job #359 was not completed by the end of March. Madtack's actual overhead cost for the month of March totaled $18,000. Calculate the cost of goods sold reported by Madtack Company for March after the overhead variance has been closed. Do not use decimals in your answer.

Explanation / Answer

Solution: 21,600

Working:

The only job sold during March was job #360. Thus the unadjusted cost of goods sold will be the costs of job #360

Cost of Job #360 = 6,300 + 3,300 + 4,000 + (4,000 x 125%) = $18,600

Total applied overhead = (3,000 + 4,000 + 5,000 ) * 125% = 15,000

Underapplied : 18,000 - 15,000 = 3,000

Adjusted cost of goods sold : 18,600 + 3,000 = 21,600

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