Introduction to Managerial Accounting: The Foundational 15 Unit 2 Chapter 3 - Sweeten Company
Introduction to Managerial Accounting The Foundational 15 Unit 2 Chapter 3 Sweeten Company has no job 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 plant wide 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 labor hours to be worked 2,000 Total actual manufacturing cost incurred $12,500 JOB P JOB Q Direct materials $13,000 $8,000 Direct labor cost $21,000 $7,500 Actual direct labor hours worked 1,400 500 Required: 1. What is the company's predetermined overhead rate? 2. How much manufacturing overhead was applied to Job P and Q? 3. What is direct labor hourly wage rate? 4. If Job P included 20 units, what is its unit product cost? What is the total amount of manufacturing cost assigned to Job Q as of the end of March (including applied overhead?) 5. Assume the ending raw materials inventory is $1,000 and the company does not use any indirect materials. Prepare the journal entries to record raw materials purchases and the issuance of direct materials for use in production. 6. Assume that the company does not use any indirect labor. Prepare the journal entry to record the direct labor costs add to production. 7. Prepare the journal entry to apply manufacturing overhead to production. 8. Assume the ending raw materials inventory is $1,000 and the company does not use any indirect materials. Prepare a schedule of cost of goods manufactured. 9. Prepare the journal entry to transfer costs from Work in Process to finished goods. 10. Prepare a completed Work in Process T-accounts including the beginning and ending balances and all debits and credits posted to the account. 11. Prepare a schedule of cost of goods sold. (Stop after computing the unadjusted cost of goods sold) 12. Prepare the journal entry to transfer costs from Finished Goods to Costs of Goods Sold. 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 cost of goods sold. 15. Assume that Job P includes 20 units that each sell for $3,000 and that the company's selling and administrative expenses in March were $14,000. Prepare an absorption costing income statement for March.
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