Question

Consider the following data: Inventories Beginning Ending Work in Process $500,000 $420,000 Finished Goods $824,000 $745,000...

Consider the following data:

Inventories Beginning Ending
Work in Process $500,000 $420,000
Finished Goods $824,000 $745,000
Additional Information:
Direct Materials $351,000
Direct Labor $513,000
Labor Hours Worked 10,000 DLH
Manufacturing Overhead Incurred $243,000
POHR $22 per DLH

What is the value of the adjusted Cost of Goods Sold that should be included on the Income Statement?

$1,266,000
$1,220,000
$1,186,000
$1,243,000

Homework Answers

Answer #1
Schedule of Cost of Goods Manufactured
Direct materials 351000
Direct labor 513000
Manufacturing overhead applied to work in process inventory 220000 =10000*22
Total manufacturing costs 1084000
Add: Beginning work in process inventory 500000
1584000
Deduct: Ending work in process inventory 420000
Cost of goods manufactured 1164000
Schedule of Cost of Goods Sold
Finished goods inventory, beginning 824000
Add: Cost of goods manufactured 1164000
Cost of goods available for sale 1988000
Deduct: Finished goods inventory, ending 745000
Unadjusted cost of goods sold 1243000
Add: Underapplied overhead 23000 =243000-220000
Adjusted cost of goods sold 1266000
Option 1 $1266000 is correct
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