A carpenter company uses job-order costing. The following is a summary of factor

Question

A carpenter company uses job-order costing. The following is a summary of factory operations:

Direct materials purchased on account $125,000.00

Direct materials requisitioned $110,000.00

Direct labor costs incurred $256,000.00

Factory Overhead costs incurred (Depreciation Expense only) $150,000.00

Cost of goods completed $515,000.00

Cost of goods sold $$378,000.00

Sales on Account $430,000.00

Factory overhead applied ?

Factory overhead costs are applied at 50% of direct labor costs.

Required:

Is the factory overhead overapplied or underapplied?

What is the actual, correct amount of cost of goods sold?

Explanation / Answer

Particulars Amount ($) Direct materials purchased on account 1,25,000 Direct materials requisitioned 1,10,000 Direct labor costs incurred 2,56,000 Factory Overhead costs incurred (Depreciation Expense only) 1,50,000 Cost of goods completed 5,15,000 Cost of goods sold 3,78,000 Sales on Account 4,30,000 Factory overhead applied (50% of Direct labour cost) 128000 Factory Overhead costs incurred (Depreciation Expense only) 1,50,000 Underapplied Factory overhead -22,000 Cost of goods sold 4,00,000

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