Reference: 03-06
The Milo Company's records for May contained the following information: $$\begin{array} { | l | l | l | }
\hline \text { Actual direct labour-hours } & 9,000 & \text { hours } \
\hline \text { Actual direct labour cost } & \$ 47,000 & \
\hline \text { Direct material purchased } & 16,000 & \
\hline \text { Direct material used } & 14,000 & \
\hline \text { Cost of goods sold } & 100,000 & \
\hline \text { Overapplied overhead } & 5,000 & \
\hline \text { Ending inventories: } & & \
\hline \text { Raw materials } & 30,000 & \
\hline \text { Work in process } & 50,000 & \
\hline \text { Finished goods } & 70,000 & \
\hline
\end{array}$$ The company uses a predetermined overhead rate of $5.00 per direct labour hour to apply manufacturing overhead to jobs.
-The Cost of Goods Sold for the year (before disposition of any overhead underapplied or overapplied)was:

Question

Reference: 03-06
The Milo Company's records for May contained the following information: $$\begin{array} { | l | l | l | } 
\hline \text { Actual direct labour-hours } & 9,000 & \text { hours } \
\hline \text { Actual direct labour cost } & \$ 47,000 & \
\hline \text { Direct material purchased } & 16,000 & \
\hline \text { Direct material used } & 14,000 & \
\hline \text { Cost of goods sold } & 100,000 & \
\hline \text { Overapplied overhead } & 5,000 & \
\hline \text { Ending inventories: } & & \
\hline \text { Raw materials } & 30,000 & \
\hline \text { Work in process } & 50,000 & \
\hline \text { Finished goods } & 70,000 & \
\hline
\end{array}$$ The company uses a predetermined overhead rate of $5.00 per direct labour hour to apply manufacturing overhead to jobs.
-The Cost of Goods Sold for the year (before disposition of any overhead underapplied or overapplied)was:

Quizplus · Accepted Answer

The Cost of Goods Sold (COGS) before adjusting for overapplied overhead is given as $100,000. Since the overhead was overapplied by $5,000, this means that the actual COGS after adjusting for the overapplied overhead would be $100,000 - $5,000 = $95,000. However, the question asks for the COGS before this adjustment, which remains $100,000. None of the provided options match this scenario directly, suggesting a potential misunderstanding of the question or a mistake in the options provided. Given the context, the closest answer based on the provided information and typical accounting adjustments for overapplied overhead would be to consider the initial COGS before any overhead adjustments, but none of the options accurately reflect this. The explanation focuses on the process of adjusting COGS for overapplied overhead, but the discrepancy in the final answer suggests a need for clarification or correction in the question or answer choices.

Reference: 03-06 the Milo Company's Records for May Contained the Following

Reference: 03-06
the Milo Company's Records for May Contained the Following