Heiny Inc. uses a job-order costing system in which any underapplied or overappl

Question

Heiny Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed to cost of goods sold at the end of the month. In March, the company completed job G59N that consisted of 21,000 units of one of the company's standard products. No other jobs were in process during the month. The job cost sheet for job G59N shows that the job's total cost was $940,800. During the month, the actual manufacturing overhead cost incurred was $269,640 and the manufacturing overhead cost applied was $249,900. And during the month, 6,000 completed units from job G59N were sold. No other products were sold during the month. The unadjusted cost of goods sold (in other words, the cost of goods sold BEFORE adjustment for any underapplied or overapplied overhead) for March is closest to:

A.

$871,500

B.

$274,440

C.

$940,800

D.

$268,800

A.

$871,500

Explanation / Answer

Hi,

Please find the answer as follows:

Total Cost of Goods Sold for 21000 units = 940800

Unadjusted Cost of Goods Sold for 6000 units = 940800*6000/21000 = 268800

Option D (268800) is the correct answer.

Thanks.

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