Question

Boursaw Corporation has provided the following data concerning last month’s operations. Purchases of raw materials $33,000 Indirect materials included in manufacturing overhead $ 4,000 Direct labor cost $58,000 Manufacturing overhead applied to Work in Process $78,000 Underapplied overhead $ 5,000 Beginning Ending Raw materials inventory $10,000 $15,000 Work in process inventory $56,000 $72,000 Finished goods inventory $41,000 $49,000 Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. How much is the unadjusted cost of goods sold on the Schedule of Cost of Goods Sold?

Answer 1

Answer:

COGS= $136,000

Explanation:

First, we need to calculate the cost of goods manufactured:

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

We deduct the indirect material from the direct material purchase, so we don't sum it twice.

Because it is the unadjusted cost of goods sold, we take into account the allocated overhead.

cost of goods manufactured= 56,000 + (10,000 + 33,000 - 4,000 - 15,000) + 58,000 + 78,000 - 72,000

cost of goods manufactured= $144,000

To calculate the unadjusted cost of goods sold, we need to use the following formula:

COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 41,000 + 144,000 - 49,000

COGS= $136,000