Lambson Inc. uses a job-order costing system in which any underapplied or overap

Question

Lambson 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 January the company completed job Z65N that consisted of 17,000 units of one of the company's standard products. No other jobs were n process during the month. The total manufacturing cost on job Z65N's job cost sheet was $1,023,400. The manufacturing overhead for the month was underapplied by $8,200. During the month, 7,000 completed units from job Z65N were sold. No other products were sold during the month. The cost of goods sold that would appear on the income statement for January, after adjustment for any underapplied or overapplied overhead, is closest to: $414,400 $1,023,450 $1,031,600 $429,600

Explanation / Answer

Total manufacturing cost for producing 17000 units = $1023400

Therefore total manufacturing cost for producing 7000 units = ($1023400 * 7000)/17000 = $421400

Therefore the cost of goods sold that would appear in the income statement = $421400 + $8200 = $429600

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