Question

At the end of the year, Ilberg Company provided the following actual information:

Answer 1

Answer:

Adjusted cost of goods sold =$ 1,888,000

Overhead variance = 2,000  favorable

Explanation:

Overhead variance:

is the difference between the absorbed overhead and the actual overhead.

Absorbed overhead = OAR × direct labor cost

                                 = 80% × 532,000 = $425,600

Over absorbed overhead = absorbed overhead - Actual overhead

                              = 425,600 - 423,600 = 2,000  over-absorbed

Overhead variance = 2,000  favorable

Adjusted cost of goods sold

= cost of goods sold - over absorbed overheads

= 1,890,000 - 2,000 =$ 1,888,000