Question

Morrow Corporation had only one job in process during May—Job X322—and had no finished goods inventory on May 1. Job X32Z was started in April and finished during May. Data concerning that job appear below: $ 7,500 $ $ Beginning balance Charged to the job during May Direct materials Direct labor Manufacturing overhead applied Units completed Units in process at the end of May Units sold during May A 11,700 3,900 5,900 290 0 135 In May, overhead was overapplied by $490. The company adjusts its cost of goods sold every month for the amount of the overhead that was underapplied or overapplied. Required: Using the indirect method, determine the cost of goods sold for May. Cost of goods sold $ 8,890|

Answer 1

	Cost of Good sold	$      13,010
	Workings:
	Morrow Corporation
	Cost of goods manufactured
	Beginning Inventory	$         7,500
	Direct Materials	$      11,700
Add:	Direct Labor	$         3,900
Add:	Manufacturing overheads applied	$         5,900
(i)	Cost of goods manufactured	$      29,000
(ii)	Completed units	290
(i) / (ii)	Unit cost	$            100
	Total cost of Ending Finished goods Inventory:	=	(Units completed - Units sold) X Unit cost
		=	(290 - 135) X $100
		=	$                                                                     15,500
	Schedule of Cost of Goods Sold
	Finished Goods Inventory Beginning	$                -
	Cost of goods manufactured	$      29,000
	Cost of goods available for sale	$      29,000
Deduct:	Finished Goods Inventory Ending	$     -15,500
	Unadjusted cost of goods sold	$      13,500
Less:	Overapplied Overheads	$           -490
	Adjusted cost of goods sold	$      13,010