Smith Company has the following selected debit balance accounts at the end of the current year: work in process,$25,000; finished goods,$12,500; cost of goods sold,$37,500; and factory overhead,$6,000.What will be the pro-rated amount charged to cost of goods sold for factory overhead?

Question

Quizplus · Accepted Answer

The pro-rated amount charged to cost of goods sold for factory overhead can be calculated as follows:

Total debit balance of selected accounts = Work in process + Finished goods + Cost of goods sold + Factory overhead
= $25,000 + $12,500 + $37,500 + $6,000
= $81,000

Pro-rated amount charged to cost of goods sold for factory overhead = (Factory overhead / Total debit balance of selected accounts) x Cost of goods sold
= ($6,000 / $81,000) x $37,500
= $2,777.78 or approx. $3,000

Therefore, the correct option is A) $3,000.

Smith Company Has the Following Selected Debit Balance Accounts at the End