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 $281,000 and Its beginning and ending Inventories were: During the month, the manufacturing overhead cost Incurred was $84,000 and the manufacturing overhead cost applied was $90,000. 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:

Explanation / Answer

$280500 is the closest to the cot of goods sold that would appear in the income statement fo january and that has been adjusted for underapplied or overapplied overhead:

over applied overhead overhead applied - overhead under applied =: $90000-$84000 = $6000/-

cost of goods sold = $281000

adjusted cost of goods sold that would appear in income statement : $281000 - $6000 = $275000 which is closest to $280500

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