Question

Zander 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 F21X that consisted of 28,350 units of one of the company's standard products. No other jobs were in process during the month. The job cost sheet for job F21X shows the following costs: Beginning balance $79,380 Direct materials $895,860 Direct labor cost $309,015 Manufacturing overhead cost applied $518,805 During the month, the actual manufacturing overhead cost incurred was $513,135 and 18,900 completed units from job F21X 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:___________.
a) $1,202,040
b) $1,199,240
c) $1,723,680
d) $1,803,060

Answer 1

Answer:

COGS= $1,202,040

Explanation:

First, we need to calculate the manufacturing cost:

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

cost of goods manufactured= 79,380 + 895,860 + 309,015 + 518,805 - 0

cost of goods manufactured= $1,803,060

Now, the cost of goods sold:

COGS= (Total cost/total units)*units sold

COGS= (1,803,060/28,350)*18,900

COGS= $1,202,040