Stanley Company uses a job cost system. Manufacturing overhead has been overallocated by $6300 for the year. Actual overhead incurred was $105,700. Other balances are: What will adjusted cost of goods sold be after closing manufacturing overhead?

Question

Stanley Company uses a job cost system. Manufacturing overhead has been overallocated by $6300 for the year. Actual overhead incurred was $105,700. Other balances are:  What will adjusted cost of goods sold be after closing manufacturing overhead?

Quizplus · Accepted Answer

To adjust for overallocated manufacturing overhead, we need to subtract the overallocated amount from the total manufacturing overhead incurred: 
Adjusted Manufacturing Overhead = Actual Overhead Incurred - Overallocated Amount = $105,700 - $6,300 = $99,400

The adjusted cost of goods sold can then be calculated by adding the total job costs (direct materials, direct labor, and manufacturing overhead) and subtracting the ending balance of work in process inventory:

Adjusted Cost of Goods Sold = Total Job Costs - Ending WIP Inventory 
= $283,000 - $900 
= $282,100

Therefore, the best choice is B.

Stanley Company Uses a Job Cost System