Paskey Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed to cost of goods sold at the end of the month. In July the company completed job C77T that consisted of 12,000 units of one of the company's standard products. No other jobs were in process during the month. The job cost sheet for job C77T shows that the job's total cost was $771,600. During the month, 10,000 completed units from job C77T were sold. No other products were sold during the month. The unadjusted cost of goods sold (in other words, the cost of goods sold BEFORE adjustment for any underapplied or overapplied overhead) for July is closest to:

Question

Quizplus · Accepted Answer

Since there were no other jobs in process during the month and only 10,000 of the 12,000 units from job C77T were sold, the remaining 2,000 units are still in inventory and are included in ending inventory. Therefore, the cost of goods sold for the month is calculated as follows: 
Total cost of job C77T = $771,600
Cost per unit = Total cost / Total units = $771,600 / 12,000 = $64.30 per unit
Units sold = 10,000
Cost of goods sold = Units sold x Cost per unit = 10,000 x $64.30 = $643,000
This is the unadjusted cost of goods sold, before any adjustment for underapplied or overapplied overhead. Therefore, the closest answer choice is B.