The cost of goods sold for July after allocation of any underapplied or overapplied manufacturing overhead for the month is closest to:

Question

Quizplus · Accepted Answer

We can use the following formula to calculate the cost of goods sold:

Cost of goods sold = beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory

Beginning finished goods inventory = $25,500
Ending finished goods inventory = $30,520
Cost of goods manufactured = direct materials + direct labor + manufacturing overhead + beginning work in process inventory - ending work in process inventory

Direct materials = $23,780
Direct labor = $16,940
Manufacturing overhead = $21,960 - $1,500 (overapplied) = $20,460
Beginning work in process inventory = $4,980
Ending work in process inventory = $2,200

Plugging in the numbers, we get:

Cost of goods manufactured = $23,780 + $16,940 + $20,460 + $4,980 - $2,200 = $64,960

Now we can calculate the cost of goods sold:

Cost of goods sold = $25,500 + $64,960 - $30,520 = $59,940

However, we need to allocate the overapplied manufacturing overhead of $1,500, which means we need to decrease the cost of goods sold by this amount:

Cost of goods sold = $59,940 - $1,500 = $58,440

Therefore, the closest answer is C) $107,020.

The Cost of Goods Sold for July After Allocation of Any