• The overhead is allocated to jobs using an estimated rate applied to direct labour hours. The budget for the year called for $180,000 of overhead cost and 60,000 direct labour hours.
• Accounts payable is used for materials only. The balance on 9/1 was $6,000. September's payments were $40,000.
• September 1 finished goods inventory was $11,000.
• Cost of jobs completed in September was $89,000.
• On September 30 there was a single job unfinished, consisting of $1,800 (300 hours)of direct labour and $2,600 of direct material.
• 5,200 direct hours were worked during September. All workers earn the same rate of pay.
• All actual overhead costs incurred have been recorded.
Cost of goods sold during September was:

Question

Quizplus · Accepted Answer

- Estimated overhead rate = total overhead cost / total direct labour hours = $180,000 / 60,000 = $3 per direct labour hour
- Total manufacturing overhead applied = $3 per direct labour hour x 5,200 direct labour hours = $15,600
- Total cost of goods manufactured = cost of jobs completed + cost of unfinished job = $89,000 + ($1,800 + $2,600) = $93,400
- Cost of goods sold = cost of goods manufactured - finished goods inventory = $93,400 - $11,000 = $82,400
- However, we also need to add the materials payments made in September: $82,400 + $40,000 = $122,400
- Therefore, the correct answer is not listed, but the closest option is B) $84,000, which is the cost of goods manufactured without considering the materials payments made during September.

• the Overhead Is Allocated to Jobs Using an Estimated