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 March and Job Q was incomplete at the end of 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):

Estimated total fixed manufacturing overhead	$	11,000
Estimated variable manufacturing overhead per direct labor-hour	$	1.20
Estimated total direct labor-hours to be worked		2,200
Total actual manufacturing overhead costs incurred	$	12,700

	Job P			Job Q
Direct materials	$	13,200		$	8,200
Direct labor cost	$	16,900		$	7,800
Actual direct labor-hours worked		1,300			600

10. Calculate the cost of goods sold using the direct method.

11. Calculate the cost of goods manufactured using the indirect method.

12. Calculate the cost of goods sold using the indirect method.

13. How would you revise your answer to question 11 if the company had beginning work in process inventory of $8,200?

14. How would you revise your answer to question 12 if the company had beginning finished goods inventory of $12,200?

15. Assume that Job P includes 24 units that each sell for $2,600 and that the company’s selling and administrative expenses in March were $20,000. Prepare an absorption costing income statement for March.

Answer 1

Dear student, we cannot able to post solution more than four subparts of the question as per our policy.

Estimated total fixed manufacturing overhead			$        11,000
Estimated total direct labor-hours to be worked			2,200
Estimated fixed manufacturing overhead per direct labor-hour			$            5.00
Add: Estimated variable manufacturing overhead per direct labor-hour			$            1.20
Predetermined Overhead Rate			$            6.20
	Job P	Job Q	Total
Actual direct labor-hours worked	1,300	600
Predetermined Overhead Rate	$            6.20	$              6.20
Applied manufacturing overhead	$          8,060	$            3,720	$        11,780
Total actual manufacturing overhead costs incurred			$        12,700
Less: Total manufacturing overhead applied			$        11,780
Underapplied of overhead applied			$              920

Answer 10

Calculate the cost of goods sold using the direct method.
Direct Material			$        13,200
Direct labor cost			$        16,900
Applied manufacturing overhead			$          8,060
Unadjusted Cost of Good sold			$        38,160
Add: Underapplied of overhead applied			$              920
Adjusted Cost of Good sold			$        39,080

Answer 11

Calculate the cost of goods manufactured using the indirect method.
Beginning work-in progress			$                  0
Total direct materials (13200+8200)		$         21,400
Total direct labor cost (16900+7800)		$         24,700
Applied Manufacturing overhead		$         11,780
Total manufacturing cost			$        57,880
Total cost of work in progress			$        57,880
Less: Ending work-in progress (Cost of Job Q = 8200+7800+3720)			$        19,720
Cost of Good manufactured			$        38,160

Answer 12

Calculate the cost of goods sold using the indirect method.
Beginning Finished Goods Inventory			$                  0
Add: Cost of Goods Manufactured			$        38,160
Cost of Goods available for sale			$        38,160
Less: Ending Finished Goods Inventory			$                  0
Unadjusted Cost of good sold			$        38,160
Add: underapplied overhead			$              920
Adjusted Cost of Good sold			$        39,080

Answer 13

How would you revise your answer to question 11 if the company had beginning work in process inventory of $8,200?
Beginning work-in progress			$          8,200
Total direct materials (13200+8200)		$         21,400
Total direct labor cost (16900+7800)		$         24,700
Applied Manufacturing overhead		$         11,780
Total manufacturing cost			$        57,880
Total cost of work in progress			$        66,080
Less: Ending work-in progress (Cost of Job Q = 8200+7800+3720)			$        19,720
Cost of Good manufactured			$        46,360