Cienfuegos Corporation has provided the following data concerning last month’s o

Question

Cienfuegos Corporation has provided the following data concerning last month’s operations.

The company closes out any underapplied or overapplied manufacturing overhead to cost of goods sold. How much is the adjusted cost of goods sold on the Schedule of Cost of Goods Sold?

Multiple Choice

$157,000

$154,000

$161,000

$197,000

Purchases of raw materials $ 36,000 Indirect materials included in manufacturing overhead $ 4,000 Direct labor cost $ 58,000 Manufacturing overhead applied to Work in Process $ 90,000 Overapplied overhead $ 3,000

Explanation / Answer

Schedule of Cost of Goods Manufactured Direct materials: Raw materials inventory, beginning 10000 Add: Purchases of raw materials 36000 Total raw materials available 46000 Deduct: Raw materials inventory, ending 21000 Raw materials used in production 25000 Less: Indirect materials 4000 21000 Direct labor 58000 Manufacturing overhead applied to work in process inventory 90000 Total manufacturing costs 169000 Add: Beginning work in process inventory 62000 231000 Deduct: Ending work in process inventory 70000 Cost of goods manufactured 161000 Schedule of Cost of Goods Sold Finished goods inventory, beginning 36000 Add: Cost of goods manufactured 161000 Cost of goods available for sale 197000 Deduct: Finished goods inventory, ending 40000 Unadjusted cost of goods sold 157000 Less: Overapplied overhead 3000 Adjusted cost of goods sold 154000 Option 2 $154,000 is correct

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