Question

Dreckman Inc, uses a job order costing system in which any underappiled or overapplied overhead is closed to cost of goods sold at the end of the month. In August the company completed job M27K that consisted of 17000 units of one of the company's standard products. No other jobs were in process during the month The total manufacturing cost for job M27K according to its job cost sheet was 51118.600,hence the per unit product cost is $65.80. During the month, the actual manufacturing overhead cost incurred was $265.880 and the manufacturing overhead appled was $272,000. And during the month, 1000 completed units from job M27% were sold. No other products were sold during the month The cost of goods sold that would appear on the income statement for August, after adjustment for any underapplied or overapplied overhead, is closest to: Multiple Choice $59.000 571920 O $112.450 51,718,600

Answer 1

Solution: 1

Calculation of Cost of Goods sold to appear to Income statement after adjustment:

Adjusted Cost of Goods sold = [Per unit Product cost * Units sold] - Overapplied Overhead

= ($65.80 * 1000 units) - ($272,000 - $265,880)

= $65,800 - $6,120

= $59,680

Solution: 2

Calculation of Unadjusted Cost of goods sold

Unadjusted Cost of Goods sold = (Total manufacturing cost / Units completed) * Units sold

= [($70,785 + $699,270+ $265,980 + $403,260) / 21,450 Units] * 14,300 units

= ($1,439,295 / 21,450 units) * 14,300 Units

= $959,530