Question

during 2016. Beginning Work in Process Inventory, $6,000. $15,000 overhead costs were $88,000 e Adjusted Cost of Goods Sold was $308,000. 82,000 6,000 Overhead

Answer 1

Item	Amount
Direct materials used	140,550
Direct labor	82,000
Manufacturing overhead applied	82,000
Total current manufacturing costs	304,550
+ Beginning work in process inventory	6,000
- Ending work in process inventory	- 4,800
Cost of goods manufactured	305,750
+ Beginning finished goods inventory	15,000
- Ending finished goods inventory	- 18,750
Unadjusted cost of goods sold	302,000
Overhead adjustment	6,000
Adjusted cost of goods sold	$308,000

Explanation:

(i) Actual manufacturing overhead cost = $88,000

Applied manufacturing overhead cost = $82,000

Hence, overhead adjustment = 88,000 - 82,000

= $6,000

(ii) Ending finished goods inventory = 25% more than beginning finished goods inventory

= 15,000 x 125%

= $18,750

(iii) Ending work in process inventory = 20% less than beginning work in process inventory

= 6,000 x 80%

= $4,800

(iv) Manufacturing overhead applied = 100% of direct labor = $82,000

(v) Direct material used = Total manufacturing cost - Manufacturing overhead applied - Direct labor

= 304,550 - 82,000 - 82,000

= $140,550

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