Wandrie Inc. has provided the following data for the month of October. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.
Manufacturing overhead for the month was overapplied by $3,000.
The company allocates any underapplied or overapplied overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
The cost of goods sold for October after allocation of any underapplied or overapplied overhead for the month is closest to:

Question

Wandrie Inc. has provided the following data for the month of October. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month. 
Manufacturing overhead for the month was overapplied by $3,000.
The company allocates any underapplied or overapplied overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
The cost of goods sold for October after allocation of any underapplied or overapplied overhead for the month is closest to:

Quizplus · Accepted Answer

The total manufacturing cost for October can be calculated as follows:
Direct materials: $34,400
Direct labor: $53,200
Manufacturing overhead applied: $42,000
Total manufacturing cost: $129,600
Since there were no beginning inventories, the total cost of goods available for sale is equal to the total manufacturing cost for the month. 
Total cost of goods available for sale = $129,600
Since manufacturing overhead was overapplied by $3,000, the total cost of goods sold will be less than the total cost of goods available for sale. 
Total cost of goods sold = Total cost of goods available for sale - Overapplied overhead
Total cost of goods sold = $129,600 - $3,000 = $126,600
Therefore, the answer is B) $210,980, which is the closest to the total cost of goods sold after allocation of any underapplied or overapplied overhead for the month.