The manufacturing operations of a company had the following balances for the year: Beginning Balance Ending Balance Raw materials $84,000 $91,000 Work in process $45,000 $59,000 Finished goods $28,000 $23,000 The company transferred $918,000 of completed goods out of work in process during the year. The overhead is underapplied by $3,000. What is the adjusted cost of goods sold for the year?

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Business

Jazmin Weaver

6 June, 07:46

The manufacturing operations of a company had the following balances for the year: Beginning Balance Ending Balance Raw materials $84,000 $91,000 Work in process $45,000 $59,000 Finished goods $28,000 $23,000 The company transferred $918,000 of completed goods out of work in process during the year. The overhead is underapplied by $3,000. What is the adjusted cost of goods sold for the year?

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Abel Johnston · Answer 1

The Adjusted Cost of Goods Sold for the year is $926,000

Explanation:

The formula to compute COGS is:

Ending inventory = Opening inventory + Work in progress - Unadjusted COGS (Cost of Goods Sold)

$ 23,000 = $28,000 + 918,000 - COGS

COGS = $946,000 - $23,000

= $ 923,000

The formula to compute the Adjusted Cost of Goods Sold is:

Adjusted Cost of Goods Sold = Unadjusted Cost of Goods Sold + Under - applied overhead

= $923,000 + $3,000

= $926,000