The actual manufacturing overhead incurred at Hogans Corporation during April wa
ID: 2378089 • Letter: T
Question
The actual manufacturing overhead incurred at Hogans Corporation during April was $64,400, while the manufacturing overhead applied to Work in Process was $80,000. The company's Cost of Goods Sold was $295,000 prior to closing out its Manufacturing Overhead account. The company closes out its Manufacturing Overhead account to Cost of Goods Sold. Which of the following statements is true?
A. Manufacturing overhead was underapplied by $15,600; Cost of Goods Sold after closing out the Manufacturing Overhead account is $310,600
B. Manufacturing overhead was underapplied by $15600; Cost of Goods Sold after closing out the Manufacturing Overhead account is $279,400
C. Manufacturing overhead was overapplied by $279,400; Cost of Goods Sold after closing out the Manufacturing Overhead account is $310,600
D. Manufacturing overhead was overapplied by $15,600; Cost of Goods Sold after closing out the Manufacturing Overhead account is $279,400
PLEASE SHOW WORK
Explanation / Answer
Actual manufacturing overhead incurred $64,400
Manufacturing overhead applied to Work in Process $80,000
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Underapplied (overapplied) manufacturing overhead ($15,600)
Adjusted cost of goods sold = Unadjusted cost of goods sold + Underapplied manufacturing overhead - Overapplied manufacturing overhead = $295,000 + $0 - $15,600 = $279.400
D. Manufacturing overhead was overapplied by $15,600; Cost of Goods Sold after closing out the Manufacturing Overhead account is $279,400
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