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 $ 10,500 Estimated variable manufacturing overhead per direct labor-hour $ 1.10 Estimated total direct labor-hours to be worked 2,100 Total actual manufacturing overhead costs incurred $ 12,600 Job P Job Q Direct materials $ 14,000 $ 8,100 Direct labor cost $ 14,400 $ 6,600 Actual direct labor-hours worked 1,200 550

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

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

3. How would you revise your answer to question 1 if the company had beginning work in process inventory of $8,100?

4. How would you revise your answer to question 2 if the company had beginning finished goods inventory of $12,100?

5. Assume that Job P includes 19 units that each sell for $2,900 and that the company’s selling and administrative expenses in March were $16,000. Prepare an absorption costing income statement for March.

Answer 1

Manufacturing overhead rate	6.10
1.1+(10500/2100)
	Job P	Job Q	Total
Direct Material	$14,000	$8,100	$22,100
Direct Labor	14400	6600	$21,000
Manufacturing overhead	7320	3355	$10,675
	(1200*6.1)	(550*6.1)
Ans 1
Costof good manufactured using indirect method
Direct Material cost
Direct material inventory Beginning	$0
Add: Purchases of direct material	$22,100
Total direct material avialable	$22,100
Less: Direct material inventory Ending	0
Direct material used		$22,100
Direct Manufacturing labor		$21,000
Manufacturing overhead		$10,675
Total manufacturing cost		$53,775
Add: Beginning work in process		0
Less: ending work in process		0
Costof good manufactured		$53,775
ans 2
Cost of good sold
Costof good manufactured	$53,775
Add: begiining Finished Goods Invemtory	0
Less: enidng Finished Goods Inventory	0
Unadjusted Cost of Good sold	$53,775
Add: Overhead Underapplied (12600-10675)	$1,925
Adjusted Cost of good sold	$55,700
ans 3
Costof good manufactured using indirect method
Direct Material cost
Direct material inventory Beginning	$0
Add: Purchases of direct material	$22,100
Total direct material avialable	$22,100
Less: Direct material inventory Ending	$0
Direct material used		$22,100
Direct Manufacturing labor		$21,000
Manufacturing overhead		$10,675
Total manufacturing cost		$53,775
Add: Beginning work in process		8100
Less: ending work in process		0
Costof good manufactured		$61,875
ans 4
Cost of good sold
Costof good manufactured	$61,875
Add: begiining Finished Goods Invemtory	12100
Less: enidng Finished Goods Inventory	0
Unadjusted Cost of Good sold	$73,975
Add: Overhead Underapplied (12600-10675)	$12,600
Adjsudted Cost of good sold	$86,575
Dear student I have answered the first four subparts