Question

Valley Inc. has the following data for January. The balance in the Finished Goods inventory account at the beginning of the month was $43,000 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 was $67,000. The adjusted cost of goods sold that would appear on the income statement for January is:

$184,000

$196,000

$180,000

$188,000

Answer 1

Ans: $188,000

Working:

Particulars	Amount ($)
Beginning inventory	43,000
Add: Cost of goods manufactured	188,000
Cost of goods available for sale	231,000
Less: Ending inventory	(47,000)
Cost of goods sold	184,000
Actual Overhead Incurred	71,000
Overhead Applied	67,000
Under applied	4,000
Adjusted cost of goods sold (cost of goods sold+ under applied OH)	$188,000