The Cost of Goods Sold for the year (before disposition of any overhead underapplied or overapplied)was:

Question

Quizplus · Accepted Answer

The Cost of Goods Sold can be calculated by adding Beginning Inventory, Purchases and Freight-In, and deducting Ending Inventory. 
Beginning Inventory: $80,000
Purchases and Freight-In: $700,000 + $16,000 = $716,000
Deduct: Ending Inventory: $80,000
Cost of Goods Sold: $716,000 - $80,000 = $636,000
However, we need to adjust this amount with the overhead overapplied or underapplied, which is given as $80,000 overapplied. This means that we need to deduct this amount from the Cost of Goods Sold to arrive at the correct figure. 
Cost of Goods Sold: $636,000 - $80,000 = $556,000
Therefore, the correct answer is B) $716,000.

The Cost of Goods Sold for the Year (Before Disposition