Question

Sway With the Breeze, LLC builds custom treehouses. On March 1, 2 jobs were in process: Oak, with a beginning balance of $12,000, and Poplar, with a beginning balance of $8,600. During March, two other jobs were started: Magnolia and Pine. During March, Oak and Magnolia were sold at cost plus 30%. Poplar and Pine remained in process at month end. During March, the following costs were incurred for each job: Oak Poplar Magnolia Pine Direct materials $1,200 $8,000 $2,100 $3,000 Direct labor* $1,800 $4,800 $360 $1,200 *Direct labor wages average $20 per direct labor hour. The company uses a traditional, normal costing system to allocate manufacturing overhead to production. The predetermined manufacturing overhead rate calculated at the beginning of the year was $5 per direct labor hour. Actual manufacturing overhead for March was $2,000. Given that MOH is closed to cost of goods sold at the end of each month, which of the following statements is correct? O A. Two of the jobs were "completed but not sold" at the end of March. OB. The gross profit reported on March's income statement was $5,440. OC. The ending work in process inventory reported on March's balance sheet was $7,050. OD. The sales revenue for the month was $23,348. O E. Manufacturing overhead was underallocated by $260 during March.

Answer 1

	WORKSHEET:
1]	Job costs:	Oak	Poplar	Magnolia	Pine	Total
	Beginning balance	$               12,000	$               8,600	$                    -	$                       -	$         20,600
	Cost added during the month:
	Direct materials	$                 1,200	$               8,000	$             2,100	$                3,000	$         14,300
	Direct labor	$                 1,800	$               4,800	$ 360	$                1,200	$ 8,160
	Mfg overhead applied	$ 450	$               1,200	$ 90	$                   300	$ 2,040
	[Direct labor*5/20]
	Total cost	$               15,450	$            22,600	$             2,550	$                4,500	$         45,100
	Sale price	$               20,085	WIP	$             3,315	WIP
	Total WIP	$               27,100
2]	Total sales revenue		$            23,400
	COGS-Unadjusted	$               18,000
	Less: Mfg overhead overapplied [2040-2000]	$ 40
	COGS-Adjusted		$            17,960
	Gross profit		$ 5,440
3]	ANSWERS:
	Correct Statements:
	A
	B