At January 1, 2020, XYZ Company reported work in process totaling $18,690. This

Question

 At January 1, 2020, XYZ Company reported work in process totaling $18,690. This balance was made up of three jobs having the following costs:                                      Job #103      Job #371      Job #511   total cost at Jan. 1, 2020 .....   $4,390        $6,370        $7,930  During 2020, XYZ Company reported the following transactions:  a. Direct materials used were: Job #103, $6,700; Job #371, $4,100; and    Job #511, $3,900. b. Direct labor incurred was: Job #103, $5,000; Job #371, $2,800; and    Job #511, $3,000. c. Overhead was applied to jobs at a rate of 80% of direct materials used. d. Job #103, which consisted of 200 units, was completed and transferred    to the finished goods warehouse. e. Job #511, which consisted of 250 units, was completed and transferred    to the finished goods warehouse. f. 155 units from Job #511 were sold and shipped to the customer. g. The actual overhead cost incurred during 2020 amounted to $10,000.  Assume the overhead variance is closed directly into cost of goods sold.  Calculate XYZ Company's cost of goods sold for 2020 after the overhead variance has been closed

Explanation / Answer

Calculate following :

Overhead applied = (6700+4100+3900)*80% = 11760

Actual overhead = 10000

Over applied overhead = 11760-10000 = 1760

Cost of goods sold :

So answer is $9369

Job 511 Beginning wip 7930 Direct material 3900 Direct labour 3000 Overhead applied (3900*80%) 3120 Total 17950 Cost of goods sold (17950/250*155) 11129 Less: Over applied overhead -1760

  cost of goods sold for 2020 after the overhead  variance has been closed

9369

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