Sweeten Company had no jobs in progress at the beginning of March and no beginni
ID: 2425797 • Letter: S
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): The ending raw materials inventory is $1,000 and the company does not use any indirect materials. 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. Required: Prepare an absorption costing income statement for March. (Input all amounts as positive values except losses which should be indicated by minus sign.)Explanation / Answer
Cost of Goods Manufactured
Particulars ::::::::::::::::::::::=Amount
Total Materials cost: =$21,000(13000+8000)
Total Labor Cost=$28,500( 21,000+ 7500)
Variable Overhead =$ 1,900(1400 + 500 =1900 *$1)
Manufacturing Ovehead=$12,500
__________________________________________
Total = $63,900
Less:
ending Inventory = $1,000
_______________________________
Total = $62,900
________________________________
Cost of Goods sales = Opening finished goods + cost of goods manufactured - ending finished goods
=Nil - $62,900- Nil
=$62,900
Absorption Income statement:
Particulars ::::::::Amount
Sales 20*3000=$60,000
Less:
Cogs:$62,900
___________________________-
Gross loss = - $2900
Selling admin =$14,000
____________________________
Loss= -$16,900
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