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Overhead

Use the following to answer questions 1-3.

Kresswall Construction applies overhead to its projects at a rate of $250 per direct labor hour. Laborers are paid an average rate of $20 per hour. The Hillside Apartments project was charged a total of $500,000 in direct materials and $80,000 in direct labor costs.

1. Refer to the information above. Overhead applied to the Hillside Apartments project amounted to:

a. $960,000.
b. $1,000,000.
c. $1,600,000.
d. $10,000,000.

2. Refer to the information above. The journal entry to transfer the completed Hillside Apartments project to Kresswall's finished goods inventory would include:

a. A debit to the Finished Goods Inventory account of $1,580,000.
b. A debit to the Finished Goods Inventory account of $2,180,000.
c. A debit to the Finished Goods Inventory account of $10,580,000.
d. A credit to the Work in Process Inventory account of $1,540,000.

3. Refer to the information above. The journal entry made by Kresswall to record the sale of the Hillside Apartments project to Connley Development Company for $3,000,000 would include:

a. A debit to Sales of $3,000,000.
b. A debit to Cost of Goods Sold of $1,580,000.
c. A credit to Finished Goods Inventory of $3,000,000.
d. A credit to Finished Goods Inventory of $1,540,000.

Solution Preview

Kresswall Construction applies overhead to its projects at a rate of $250 per direct labor hour. Laborers are paid an average rate of $20 per hour. The Hillside Apartments project was charged a total of $500,000 in direct materials and $80,000 in direct labor costs.

1. Refer to the information above. Overhead applied to the Hillside Apartments project amounted to:

a. $960,000.
b. $1,000,000.
c. $1,600,000.
d. $10,000,000.

Answer: b. ...

Solution Summary

Calculates overhead applied, identifies journal entry to transfer the completed Hillside Apartments project to Kresswall's finished goods inventory and the journal entry made by Kresswall to record the sale of the Hillside Apartments project to Connley Development Company.

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