Question

Madtack Company uses a job-order costing system and started the month of
March with three jobs in process. The cost of beginning work in process
plus the costs added during March are shown below:

                                  Job #359      Job #360      Job #361
beginning work in process .....    $4,800        $3,500        $6,300

COSTS ADDED DURING MARCH:
direct materials ..............    $4,100        $3,900        $6,400
direct labor ..................     5,000         3,000         4,000

Madtack applies overhead to jobs at a rate of 85% of direct materials
used. During March, Madtack completed and sold Job #361. Job #359 was
also completed but was not sold by the end of March. Job #360 was not
completed by the end of March. Madtack's actual overhead cost for the
month of March totaled $11,500.

Calculate Madtack's cost of goods sold for March after the overhead
variance is closed.

Answer 1

The only job sold during March was job #361. Thus the un-adjusted
cost of goods sold will be the costs of job #361
	Job #361
Beginning work in process	$6,300
Direct Material	$6,400
Direct Labor	$4,000
Overhead	$5,440
($6,400 x 85%)
Cost of Job #361	$22,140
Adjusted cost of goods sold = $22,140 - $740 = $21,400
Actual overhead	$11,500
Total applied overhead	$12,240
(4,100 + 3,900 + 6,400) x 85%
Over applied	$740