Sweeten Company had no jobs in progress at the beginning of March and no beginni

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 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): Assume the ending raw materials inventory is $1,000 and the company does not use any indirect materials. Required: Prepare the journal entry to transfer costs from Work in Process to Finished Goods.

Explanation / Answer

The journal entry to transfer costs from WIP to Finished Goods is

Finished Goods (Dr)         42,400

          WIP Job P (Cr)                     42,400

Workings:

Work in Process Job P Job Q Direct materials 13000 8000 Direct labour cost 21000 7500 Variable Mfg OH allocated 1400 500 Fixed Mfg OH allocated 7000 2500 Total Cost 42400 18500

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