Question

he following amounts were reported by Howe Company before adjusting its overapplied manufacturing overhead of $16,000. Raw Materials Inventory $80,000 Finished Goods Inventory $120,000 Work in Process Inventory $200,000 Cost of Goods Sold $1,460,000. What is the amount Howe will report as cost of goods sold after it disposes of its overapplied overhead

Answer 1

Answer: $1,444,000‬

Explanation:

The Cost of Goods sold for a manufacturing company includes the Manufacturing overhead. If the overhead was overapplied, the COGS is inflated and needs a downward adjustment.

COGS after overapplied overhead is disposed of = COGS before disposal - overapplied amount

= 1,460,000 - 16,000

= $1,444,000‬