Precision Milling Machine Company has supplied the following additional informat

Question

Precision Milling Machine Company has supplied the following additional information. Use this data together with your answer to exercise 3-4 above to compute the (adjusted) Cost of Goods Sold for the company. Close out any balance in Manufacturing Overhead to Cost of Goods Sold. Actual manufacturing overhead incurred..... $ 88,000 Finished goods inventory, beginning........ $ 120,000 Finished goods inventory, ending........... $ 145,000 Critical thought writing exercise: Quality Foods, Inc., is a major producer of canned vegetables, fruits and other goods. This year the company planned a normal year of producing canned goods and set its predetermined overhead rate the same as in other years. However, during the year a major freeze in key growing areas wiped out much of the expected fruit crop and the company was able to do little canning of fruit A large amount of the manufacturing overhead cost associated with producing canned goods consists of depreciation and other fixed costs. Would you expect Quality Foods, Inc., to have underapplied or overapplied manufacturing overhead cost this year? Explain.

Explanation / Answer

Calculation of amount of raw materials used in production during the year $10000 + $145000 - $15000 = $140000 cost of goods manufactured for the year is = $60000 + $140000 +$240000 + $90000 - $75000 = $455000

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