Task: 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.
Problem 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.
Problem 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.
Problem 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.