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 | $ | 13,200 | |
| Estimated variable manufacturing overhead per direct labor-hour | $ | 1.20 | |
| Estimated total direct labor-hours to be worked | 3,300 | ||
| Total actual manufacturing overhead costs incurred | $ | 17,000 | |
| Job P | Job Q | |||||
| Direct materials | $ | 13,100 | $ | 9,300 | ||
| Direct labor cost | $ | 43,200 | $ | 11,700 | ||
| Actual direct labor-hours worked | 2,400 | 650 | ||||
5 What is the total amount of manufacturing cost assigned to Job Q as of the end of March (including applied overhead)?
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6. What is the amount of underapplied or overapplied overhead?
7.
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7. Will your answer to question 6 increase or decrease unadjusted cost of goods sold?
| Decrease | |
| Increase |
8.
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8. If Sweeten Company requisitioned $26,100 from raw materials inventory during March, then how much indirect materials cost would be included in Manufacturing Overhead Incurred?
9.
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9. If Sweeten Company’s labor time tickets totaled $60,100 for the month of March, then how much indirect labor cost would be included in Manufacturing Overhead Incurred?
10.
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10. Calculate the cost of goods sold using the direct method.
11.
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11. Calculate the cost of goods manufactured using the indirect method.
12.
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12. Calculate the cost of goods sold using the indirect method.
13.
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13. How would you revise your answer to question 11 if the company had beginning work in process inventory of $9,300?
14. How would you revise your answer to question 12 if the company had beginning finished goods inventory of $13,300?
15. Assume that Job P includes 19 units that each sell for $4,500 and that the company’s selling and administrative expenses in March were $10,000. Prepare an absorption costing income statement for March.
| 5 | Job Q | |
| Direct Materials | $9,300 | |
| Direct Labor | $11,700 | |
| Overheads (650 x $5.20) | $3,380 | |
| Total Cost | $24,380 | |
| 6 | ||
| Company's predetermined overhead rate | $5.20 | |
| Manufacturing overhead applied to Job P (2,400 x $5.20) | $12,480 | |
| Manufacturing overhead applied to Job Q (650 x $5.20) | $3,380 | |
| Total Manufacturing overhead | $15,860 | |
| Total actual manufacturing overhead costs incurred | $17,000 | |
| Underapplied overhead ($17,000 - $15,860) | $1,140 | |
| 7 | Increase | |
| 8 | Indirect materials cost | $3,700 |
| ($26,100 - $13,100 - $9,300) | ||
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