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):

Estimated total fixed manufacturing overhead	$	14,400
Estimated variable manufacturing overhead per direct labor-hour	$	1.50
Estimated total direct labor-hours to be worked		3,600
Total actual manufacturing overhead costs incurred	$	19,500

	Job P		Job Q
Direct materials	$	15,000	$	9,600
Direct labor cost	$	40,500	$	12,000
Actual direct labor-hours worked		2,700		800

1. Assume the ending raw materials inventory is $2,600 and the company does not use any indirect materials. Prepare a schedule of cost of goods manufactured.

2. Prepare the journal entry to transfer costs from Work in Process to Finished Goods

3. Prepare a schedule of cost of goods sold.

Answer 1

Computation of purchase of material:
material used in production (15000+9600)				24600
Add: Ending Inventory				2,600
Material purchases				27200
Pre-determined OH rate :
Fixed OH rate (14400/3600)			4
Variable OH rate			1.50
Total Oh rate per DLH			5.50
Schedule of Cost of Goods manufactured:
Material purchases			27,200
Less: ending inventory			2,600
Material consumed				24600
Direct labour				52500
Oh applied (3500 DLH @5.50)				19250
Total cost of Goods manufactured				96350
Journal entry:
Finished Goods inventory Account Dr.				96350
Work in process inventory Account					96350
Schedule of Cost of Goods sold:
Beigning Inventory of FG					0
Add: cost of Goods manufactured					96350
Less: Ending inventory of FG					0
Unadjusted cost of goods sold					96350
Add: Underapplied OH					250
($ 19500-19250)
Cost of goods sold Adjusted					96600