Question

The following amounts were reported by a company before adjusting its overapplied manufacturing overhead of $48,000. What is the company’s adjusted cost of goods sold?
Cost of goods sold $730,000
Applied overhead $368,000
actual overhead $320,000

Answer 1

Answer:

$682,000

Explanation:

Where the amount absorbed is more than the actual overhead, it means that there is over absorption of overhead.

The cost of goods sold is inflated to over absorption value when it comes to over absorption.

Therefore;

Adjusted cost of goods sold = Cost of goods sold - Over applied manufacturing overhead

= $730,000 - $48,000

= $682,000