Grayson Inc.has provided the following data for the month of October.The balance in the Finished Goods inventory account at the beginning of the month was $49,000 and at the end of the month was $45,000.The cost of goods manufactured for the month was $226,000.The actual manufacturing overhead cost incurred was $74,000 and the manufacturing overhead cost applied to Work-in-Process was $70,000.The adjusted cost of goods sold that would appear on the income statement for October is:

Question

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The cost of goods sold is calculated as: Beginning Finished Goods Inventory ($49,000) + Cost of Goods Manufactured ($226,000) - Ending Finished Goods Inventory ($45,000) = Unadjusted Cost of Goods Sold ($230,000). Since the actual manufacturing overhead ($74,000) is greater than the applied overhead ($70,000), the cost of goods sold needs to be adjusted by adding the underapplied overhead of $4,000, resulting in an adjusted cost of goods sold of $234,000.