Question

Manufacturing overhead has an underallocated balance of

$ 12 comma 400$12,400 ;

raw materials inventory balance is

$ 145 comma 600$145,600 ;

work in process inventory is

$ 122 comma 300$122,300 ;

finished goods inventory is

$ 140 comma 800$140,800 ;

and cost of goods sold is

$ 170 comma 300$170,300.

After adjusting for the underallocated manufacturing overhead, what is cost of goods sold?

Answer 1

Answer

Cost of Goods Sold gets:
--increased by the adjustment of Underallocated manufacturing overhead, and
--decreased by the adjustment of Overallocated manufacturing overhead.

This is because when under-allocated overheads are adjusted, Cost of Goods Sold gets DEBITED.

Hence, Cost of Goods Sold will Increase by the amount of under allocated manufacturing overhead, which is $ 12,400

After adjustment, cost of Goods SOld will be 170300+ 12400 = $ 182,700

Correct Answer = $ 182,700