Beshaw Inc.has provided the following data for the month of January.There were no beginning inventories; consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month. Manufacturing overhead for the month was underapplied by $7,000.
The Corporation allocates any underapplied or overapplied manufacturing overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the manufacturing overhead applied during the month in those accounts.
The cost of goods sold for January after allocation of any underapplied or overapplied manufacturing overhead for the month is closest to:
A) $233,530
B) $220,720
C) $232,340
D) $219,530

Question

Beshaw Inc.has provided the following data for the month of January.There were no beginning inventories; consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month.  Manufacturing overhead for the month was underapplied by $7,000.
The Corporation allocates any underapplied or overapplied manufacturing overhead among work in process,finished goods,and cost of goods sold at the end of the month on the basis of the manufacturing overhead applied during the month in those accounts.
The cost of goods sold for January after allocation of any underapplied or overapplied manufacturing overhead for the month is closest to:
A) $233,530 
B) $220,720 
C) $232,340 
D) $219,530

Quizplus · Accepted Answer

Cost of goods sold after allocation of underapplied overhead = $226,530 + [($45,650/$55,000) × $7,000] = $226,530 + (83% × $7,000) = $232,340