Question

Abramov Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed to cost of goods sold at the end of the month. In May the company completed job N29W that consisted of 37,625 units of one of the company's standard products. No other jobs were in process during the month. The job cost sheet for job N29W shows that the job's total cost was $1,640,450. During the month, the actual manufacturing overhead cost incurred was $359,625 and the manufacturing overhead cost applied was $342,125. Also during the month, 8,750 completed units from job N29W were sold. No other products were sold during the month. The unadjusted cost of goods sold (in other words, the cost of goods sold BEFORE adjustment for any underapplied or overapplied overhead) for May is closest to:

a. $1,617,950

b. $1,640,450

c. $386,420

d. $381,500

Answer 1

Units Produced                                                   37,625 units

Total manufacturing cost for Job                        $1,640,450

Actual Manufacturing Overhead Cost                $359,625

Manufacturing Applied Overhead                      $342,125

Units Actually Sold                                             8,750 units

Unit Product Cost ($1,640,450/37,625 units)         $43.60

Unadjusted Cost of Goods sold (8750 x 43.60) $381,500

Option d. $381,500 is correct answer.