Sweeten Company had no jobs in progress at the beginning of

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):

1. Prepare a completed Work in Process T-account including the beginning and ending balances and all debits and credits posted to the account.

2. Prepare a schedule of cost of goods sold

3. Prepare the journal entry to transfer costs from Finished Goods to Cost of Goods Sold.

4.

Assume that Job P includes 35 units that each sell for $2,600 and that the company’s selling and administrative expenses in March were $13,000. Prepare an absorption costing income statement for March.

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):

Solution

A Estimated Total Direct labor hours 3600 B=A*1.5 Estimated variable overhead $          5,400 C Estimated Fixed overhead $14,400 D=B+C Total estimted overhead cost $        19,800 E=D/A Plantwide overhead rate $            5.50 per hour 1 T-ACCOUNT WORK IN PROCESS Description Debit Credit Beginning balance $0 Direct Material -P $15,000 Direct Material -Q $9,600 Direct Labor-P $40,500 Direct Labor-Q $12,000 Applied Overhead-P $        14,850 (2700*5.5) Applied Overhead-Q $          4,400 (800*5.5) Transfer to Finished goods $70,350 (15000+40500+14850) Ending Balance $26,000 2 SCHEDULE OF COST OF GOODS SOLD Direct Material $15,000 Direct Labor $40,500 Variable Overhead $          4,050 (1.5*2700) Fixed overhead $        10,800 (5.5-1.5)*2700 Under applied overhead $              250 (19500-14850-4400) Cost of goods sold $70,600 3 JOURNAL ENTRY Account Title Debit Credit Finished goods inventory $70,350 Work in process $70,350 4 INCOME STATEMENT For the month of March Sales $        91,000 (35*26000 Cost of goods sold $70,600 Gross Profit $        20,400 Selling and administrative expenses $13,000 Operating Income $          7,400