X Company had the following inventories at the beginning of the year: Raw Materi
ID: 2414748 • Letter: X
Question
X Company had the following inventories at the beginning of the year:
Raw Materials, $10,000
Work-in Process, $25,000
Finished Goods, $30,000
It had following transactions during the year. The company uses a predetermined manufacturing overhead rate of 60% of direct labor cost.
1. Purchased raw materials costing $200,000.
2. Put raw materials costing $195,000 into production.
3. Wages of employees that worked directly on products was $350,000
4. The wages of factory supervisors and factory maintenance employees was $150,000.
5. Advertising, insurance on sales person's car's sales salaries totaled $120,000.
6. Depreciation of factory equipment was $50,000.
7. The cost of goods completed during the year was $700,000.
8. The company sold products for $900,000 that had cost $680,000 to manufacture.
Assuming the company closes any overapplied or underapplied manufacturing overhead to cost of goods sold, what is cost of goods sold for the year?
Explanation / Answer
Cost of Goods sold Cost of goods sold unadjusted 680000 Less: Over-applied Overheads 10000 Adjusted Cost of Goods ssold 670000 Note: Under/Over applied OH Overheads actually incurred Factory supervisor wages 150000 Depreciation on Equipment 50000 Total OH incurred 200,000 Less: OH applied (350000*60%) 210,000 Over-applied OH 10,000
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