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 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):

Estimated total fixed manufacturing overhead	$	10,000
Estimated variable manufacturing overhead per direct labor-hour	$	1.00
Estimated total direct labor-hours to be worked		2,000
Total actual manufacturing overhead costs incurred	$	12,500

	Job P	Job Q
Direct materials	$13,000	$8,000
Direct labor cost	$21,000	$7,500
Actual direct labor-hours worked	1,400	500

12. Prepare the journal entry to transfer costs from Finished Goods to Cost of Goods Sold.

15. Assume that Job P includes 20 units that each sell for $3,000 and that the company’s selling and administrative expenses in March were $14,000. Prepare an absorption costing income statement for March.

Answer 1

Sweeten
Workings for Answer 12	Amount $	Note
Estimated total direct labor-hours to be worked	2,000.00	A
Variable OH Rate	1.00	B
Variable OH cost	2,000.00	C=A*B
Fixed Manufacturing overhead	10,000.00	D
Total OH	12,000.00	E=C+D
Plant wide predetermined OH Rate	6.00	F=E/A
Overhead applied to Job P	Amount $
Actual labor hours	1,400.00	G
Plant wide predetermined OH Rate	6.00	See F
Overhead applied	8,400.00	H=F*G
Total cost of Job P	Amount $
Direct Materials	13,000.00
Direct Labor	21,000.00
Overhead applied	8,400.00	See H
Manufacturing cost assigned to Job P	42,400.00	I
Answer 12
Journal Entry
Account	Debit $	Credit $
Cost of goods sold	42,400.00
Finished goods inventory		42,400.00
Workings for Answer 13	Amount $	Note
Number of units sold	20.00	J
Sell price	3,000.00	K
Sales value of Job P	60,000.00	L=J*K
Answer 13
Absorption costing income statement	Amount $	Note
Sales	60,000.00	See L
Less: Costs of goods sold	42,400.00	See I
Gross Profit	17,600.00
Less: Operating expense
Selling and admin expense	14,000.00
Net Operating Income	3,600.00