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Keowee Enterprises began the year with $165,700 of finished goods inventory. During the year the company manufactured goods costing $689,200. At the end of the year, $194,100 of finished goods remained in inventory. Actual manufacturing overhead was $235,800, estimated manufacturing overhead was $230,000, and manufacturing overhead applied totaled $221,500.
-Assuming the over-underapplied manufacturing overhead was considered small and,therefore,closed out to Cost of Goods Sold,the cost of goods sold reported on the income statement for the period was:
A)$646,500
B)$675,100
C)$683,600
D)$703,300

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Quizplus · Accepted Answer

The cost of goods sold can be calculated as follows:
Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory = Cost of goods sold
$165,700 + $689,200 - $194,100 = $660,800
To adjust for the overapplied overhead, we add the amount of overapplied overhead to Cost of goods sold:
$660,800 + ($235,800 - $221,500) = $675,100

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