Using the information below, What is the Cost of Goods Sold total amount? Ravste

Question

Using the information below, What is the Cost of Goods Sold total amount?

Ravsten Company uses a job-order costing system.

The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 35,000 machine-hours and incur $183,750 in manufacturing overhead cost. The following transactions occurred during the year:

a. Raw materials requisitioned for use in production, $309,000 (70% direct and 30% indirect).

b. The following costs were incurred for employee services:

c. Heat, power, and water costs incurred in the factory, $67,000.

d. Insurance costs, $30,000 (80% relates to factory operations, and 20% relates to selling and administrative activities).

e. Advertising costs incurred, $70,000.

f. Depreciation recorded for the year, $80,000 (75% relates to factory operations, and 25% relates to selling and administrative activities).

g. The company used 60,000 machine-hours during the year.

h. Goods that cost $500,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.

i. Sales for the year totaled $740,000. The total cost to manufacture these goods according to their job cost sheets was $495,000.

Overhead over applied is 33,300

Direct labor $ 180,000 Indirect labor $ 38,000 Sales commissions $ 30,000 Administrative salaries $ 45,000

Explanation / Answer

solution:

cost of goods sold unadjusted cost of goods sold    495,000 Less : over applies overhead -   33,300 total cost of goods sold    461,700

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