For work done during August, Printing Press Company incurred direct materials costs of $104,000 and conversion costs of $260,000. The company employs a just-in-time operating philosophy and backflush costing. At the end of August, it was determined that the Work in Process Inventory account had been assigned $1,080 of costs, and the ending balance of the Finished Goods Inventory account was $1,220. There were no beginning inventory balances. What was the ending balance of the Cost of Goods Sold account for August?
A) $361,700
B) $362,780
C) $362,920
D) $364,000

Question

Quizplus · Accepted Answer

The ending balance of the Cost of Goods Sold account is equal to the total manufacturing costs incurred during the period, which is the sum of direct materials costs and conversion costs. In this case, the total manufacturing costs incurred during August are $104,000 + $260,000 = $364,000. However, since the company uses backflush costing, the ending balance of the Work in Process Inventory account and the ending balance of the Finished Goods Inventory account are deducted from the total manufacturing costs to arrive at the ending balance of the Cost of Goods Sold account. In this case, the ending balance of the Cost of Goods Sold account is $364,000 - $1,080 - $1,220 = $361,700.

For Work Done During August, Printing Press Company Incurred Direct