During 2017, Sheridan Company expected Job No. 26 to cost $300000 of overhead, $500000 of materials, and $200000 in labor. Sheridan applied overhead based on direct labor cost. Actual production required an overhead cost of $260000, $510000 in materials used, and $150000 in labor. All of the goods were completed. What amount was transferred to Finished Goods?

Question

Business

Reuben Mcguire

20 November, 07:22

During 2017, Sheridan Company expected Job No. 26 to cost $300000 of overhead, $500000 of materials, and $200000 in labor. Sheridan applied overhead based on direct labor cost. Actual production required an overhead cost of $260000, $510000 in materials used, and $150000 in labor. All of the goods were completed. What amount was transferred to Finished Goods?

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Answers (1)

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Andersen · Answer 1

The $885,000 was transferred to Finished Goods

Explanation:

The computation of the transferred amount to finished good is shown below:

= Material used + labor cost + overhead cost

where,

Overhead cost = (Expected overhead : estimated labor) * actual labor cost

= ($300,000 : $200,000) * $150,000

= 1.5 * $150,000

= $225,000

The other items values would remain the same

Now put these values to the above formula

So, the value would equal to

= $510,000 + $150,000 + $225,000

= $885,000