Emigh Corporation's cost of goods manufactured for the just completed month was $146,000 and its overhead was overapplied by $5,000. The beginning finished goods inventory was $35,000 and the ending finished goods inventory was $37,000. The company closes out any underapplied or overapplied manufacturing overhead to cost of goods sold. How much was the adjusted cost of goods sold on the Schedule of Cost of Goods Sold?
A) $144,000
B) $146,000
C) $181,000
D) $139,000

Question

Quizplus · Accepted Answer

Adjusted Cost of Goods Sold = Cost of Goods Manufactured + Beginning Finished Goods Inventory - Ending Finished Goods Inventory

Adjusted Cost of Goods Sold = $146,000 + $35,000 - $37,000 = $144,000

Since the overhead was overapplied, it will decrease the cost of goods sold. Therefore, the adjusted cost of goods sold will be less than the cost of goods manufactured. So, the correct answer is option D, $139,000, which is the cost of goods manufactured ($146,000) minus the overapplied overhead ($5,000) plus the beginning finished goods inventory ($35,000) minus the ending finished goods inventory ($37,000).

Adjusted Cost of Goods Sold = ($146,000 - $5,000) + $35,000 - $37,000 = $139,000

Emigh Corporation's Cost of Goods Manufactured for the Just Completed