Stanley Company uses a job cost system. Manufacturing overhead has been overallocated by $ 6 comma 600 for the year. Actual overhead incurred was $ 105 comma 000. Other balances are: Raw materials inventory at end of year $ 15 comma 000 Work in process inventory at end of year $ 32 comma 000 Finished goods inventory at end of year $ 42 comma 400 Unadjusted cost of goods sold for the year $ 290 comma 400 What will adjusted cost of goods sold be after closing manufacturing overhead?

Question

Carly Parsons

Business

18 December, 13:05

Stanley Company uses a job cost system. Manufacturing overhead has been overallocated by $ 6 comma 600 for the year. Actual overhead incurred was $ 105 comma 000. Other balances are: Raw materials inventory at end of year $ 15 comma 000 Work in process inventory at end of year $ 32 comma 000 Finished goods inventory at end of year $ 42 comma 400 Unadjusted cost of goods sold for the year $ 290 comma 400 What will adjusted cost of goods sold be after closing manufacturing overhead?

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Ariel Potts · Answer 1

Adjusted Cost of Goods sold = $283,800

Explanation:

The question is to determine the adjusted cost of goods after closing manufacturing overhead.

First step is that the Manufacturing overhead of Stanley Company has been over-applied by $6,600.

The implication or meaning is that the overhead attributed to the job undertaken was more than the actual overhead that was incurred.

Over-applied manufacturing expense would usually overstate the cost of goods sold. Therefore

Adjusted Cost of Goods sold = Unadjusted cost of goods sold - Over-applied amount of overhead

= $290,400 - $6,600

= $283,800