Burghardt Inc. uses a job-order costing system in which any underapplied or over

Question

Burghardt Inc. uses a job-order costing system 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 January was $357,800 and its beginning and ending inventories were: Inventories: Beginning Ending Work in process $34,200 $17,800 Finished goods $65,250 $49,150 During the month, the manufacturing overhead cost incurred was $96,000 and the manufacturing overhead cost applied was $114,000. The cost of goods sold that appears on the income statement for January and that has been adjusted for any underapplied or overapplied overhead is closest to: 1. $356,100 2. $355,900 3. $340,000 4. $391,900

Explanation / Answer

Over head over-applied = overhead applied - actual overhead incurred = $114000 - $96000 = $18000

Cost of goods sold

= Cost of goods manufactured + beginning inventory of finished goods - ending inventory of finished goods

= $357800 + $65250 - $49150

=$ 373900

After adjusting the overapplied overhead to the cost of goods sold,

the adjusted cost of goods sold

= $373900 - overapplied overhead

= $373900 - $18000

= $355900

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