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 labour-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 $ 12,800 Estimated variable manufacturing overhead per direct labour-hour $ 1.10 Estimated total direct labour-hours to be worked 3,200 Total actual manufacturing overhead costs incurred $ 15,600 Job P Job Q Direct materials $ 16,100 $ 9,200 Direct labour $ 39,100 $ 10,200 Actual direct labour-hours worked 2,300 600

9. Prepare the journal entry to transfer costs from Work in Process to Finished Goods. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

10. Prepare a completed Work in Process T-account including the beginning and ending balances and all debits and credits posted to the account. (Do not leave any empty spaces; input a 0 wherever it is required.)

11. Prepare a schedule of cost of goods sold. (Do not leave any empty spaces; input a 0 wherever it is required.)

12. Prepare the journal entry to transfer costs from Finished Goods to Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

13. What is the amount of underapplied or overapplied overhead?

14. Prepare the journal entry to close the amount of underapplied or overapplied overhead to the appropriate account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Working "

Estimated overhead rate =Estimated overhead /Estimated activity (direct labor hour)

Variable overhead per DLH	1.10
Fixed overhead per DLH {12800/3200}	4
Plantwide overhead rate	$5.10 per DLH

Cost of Jobs

	Job P	Job Q	Total
Direct material	16100	9200	25300
Direct labor	39100	10200	49300
overhead applied	2300*5.10=11730	600*5.10=3060	14790
Total cost	66930	22460	89390
status	Completed and sold	WIP

9)

Account title	Debit	credit
Finished goods inventory	66930
Work in process inventory		66930

10)

WORK IN PROCESS INVENTORY
Beg Bal	0	completed and transferred out to finished goods inventory	66930
Direct material	25300
Direct labor	49300
overhead applied	14790
End Bal {sum of debit -sum of credit}	22460

11)

STATEMENT OF COST OF GOODS SOLD
Beg Bal of finished goods inventory	0
Transferred in	66930
Total	66930
Less:End Bal of finished goods inventory	0
Cost of gods sold	66930

12)

Account title	Debit	credit
Cost of goods sold	66930
Finished goods inventory		66930

13)

Underapplied /(overapplied) overhead =Actual overhead -applied overhead

                = 15600 -14790

                = 810 under-applied

14)

Account title	Debit	credit
Cost of goods sold	810
Manufacturing overhead		810