Cerrone Inc. has provided the following data for the month of July. The balance

Question

Cerrone Inc. has provided the following data for the month of July. The balance in the Finished Goods inventory account at the beginning of the month was $39,000 and at the end of the month was $47,000. The cost of goods manufactured for the month was $188,000. The actual manufacturing overhead cost incurred was $71,000 and the manufacturing overhead cost applied to Work in Process was $67,000. The adjusted cost of goods sold that would appear on the income statement for July is:

a) $196,000

b) $184,000

c) $180,000

d) $188,000

Explanation / Answer

The correct answer is b) $ 184,000

Cost of goods sold = Beginning inventory of finished goods + Cost of goods manufactured - Ending inventory of finished goods = $ 39,000 + $ 188,000 - $ 47,000 = $ 180,000

Adjusted cost of goods sold = cost of goods sold + manufacturing overhead cost incurred - manufacturing overhead cost applied = $ 180,000 + $ 71,000 - $ 67,000 = $ 184,000

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