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 $ 10,000

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 Direct materials $ 13,000. Job Q $ 8,000

Job P Direct labor cost $ 21,000 Job Q $ 7,500   

Job P. Actual direct labor-hours worked Job Q. 1,400 500

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

Answer 1

answer
Cost of Good sold (for Job P)
Direct Material	$                13,000
Direct labor cost	$                21,000
Manufacturing overhead (1400*6)	$                  8,400
Unadjusted Cost of Good sold (for Job P)	$                42,400
Add: underapplied overhead 12500-10900	$                  1,600
Adjusted Cost of Good sold	$                44,000
Predetermined overhead rate
10000/2000+1	$                         6