Question

Radziewicz Inc. uses a job-order costing in which any underapplied or overapplied overhead is closed out to cost of goods sold at the end of the month. The company's cost of goods manufactured for December was $128,000 and its beginning and ending inventories were:

Inventories	Beginning	Ending
Work In Process	$14,000	$16,000
Finished Goods	$55,000	$42,000

During the month, the manufacturing overhead cost incurred was $66,000 and the manufacturing overhead cost applied was $69,000.

Determine the cost of goods sold that would appear on the income statement for December; in other words, determine the cost of goods sold after adjustment for any underapplied or overapplied overhead.

Answer 1

Adjusted cost of Goods sold= $ 138,000

Working

Beginning Finished Goods Inventory		$        55,000.00
Cost of Goods manufactured		$    1,28,000.00
Goods Available for sale		$    1,83,000.00
Less :Ending Finished goods Inventory		$        42,000.00
Unadjusted Cost of Goods Sold		$    1,41,000.00
Less: Overapplied Manufacturing overheads	($69000-66000)	$        (3,000.00)
Adjusted Cost of Goods sold		$    1,38,000.00