Tusa Corporation is a manufacturer that uses job-order costing.The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year.The company has supplied the following data for the just completed year: Results of operations: The adjusted Cost of Goods Sold for the year is:
A)$1,518,000
B)$1,506,500
C)$1,642,000
D)$1,529,500

Question

Tusa Corporation is a manufacturer that uses job-order costing.The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year.The company has supplied the following data for the just completed year:  Results of operations:  The adjusted Cost of Goods Sold for the year is:
A)$1,518,000 
B)$1,506,500 
C)$1,642,000 
D)$1,529,500

Quizplus · Accepted Answer

Since the company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year, we need to adjust the actual overhead applied to the manufacturing cost to get the actual overhead cost for the year. 
Actual overhead cost = Overhead applied + Underapplied overhead 
= $800,000 + $21,000 
= $821,000

The adjusted Cost of Goods Sold can be calculated as follows: 
Adjusted Cost of Goods Sold = Actual Cost of Goods Sold + Underapplied overhead 
= $1,500,000 + $29,500 
= $1,529,500

Therefore, the best choice is D) $1,529,500. Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base
= $638,250 ÷ 37,000 direct labor-hours = $17.25 per direct labor-hour
Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred
= $17.25 per direct labor-hour × 34,000 direct labor-hours = $586,500 11ea7998_5ef8_1d1a_911b_e587a2b54dbd_TB2627_00_TB2627_00 11ea7998_5ef8_442b_911b_fb9eec205269_TB2627_00_TB2627_00

Tusa Corporation Is a Manufacturer That Uses Job-Order Costing