Question

Hubley Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed out to cost of goods sold at the end of the month. The company has provided the following data for August:

Direct materials	$	66,500
Direct labor cost	S	93,000
Manufacturing overhead cost incurred	$	60,800
Manufacturing overhead cost applied	$	65,100

Inventories:	Beginning	Ending
Work in process	$16,000	$18,200
Finished goods	$56,200	$36,000

The cost of goods sold that appears on the income statement for August and that has been adjusted for any underapplied or overapplied overhead is closest to:

$238,300

$222,400

$242,600

$246,900

Answer 1

manufacturing cost incurred during the period = direct material +direct labor +overhead applied

      = 66500+93000+65100

     = 224600

cost of goods manufactured = beginning WIP + manufacturing cost - ending WIP

   = 16000+224600-18200

    = 222400

cost of goods sold (unadjusted) = 56200+222400-36000

            = 242600

overapplied overhead = actual -applied

    = 60800-65100=-4300

cost of goods sold (adjusted) = 242600-4300 = 238300

correct option is " A"