Morrow Corporation had only one job in process during May-Job X32Z-and had no finished goods inventory on May 1. Job X32Z was started in April and finished during May. Data concerning that job appear below: Job X32Z Beginning balance $ 5,800 Charged to the job during May Direct materials $ 9,100 Direct labor $ 2,800 Manufacturing overhead applied $ 4,800 Units completed 180 Units in process at the end of May 0 Units sold during May 80 In May, overhead was overapplied by $380. The company adjusts its cost of goods sold every month for the amount of the overhead that was underapplied or overapplied. Required: 1. Using the direct method, what is the cost of goods sold for May?

Question

Business

Nia Tran

6 February, 19:44

Morrow Corporation had only one job in process during May-Job X32Z-and had no finished goods inventory on May 1. Job X32Z was started in April and finished during May. Data concerning that job appear below: Job X32Z Beginning balance $ 5,800 Charged to the job during May Direct materials $ 9,100 Direct labor $ 2,800 Manufacturing overhead applied $ 4,800 Units completed 180 Units in process at the end of May 0 Units sold during May 80 In May, overhead was overapplied by $380. The company adjusts its cost of goods sold every month for the amount of the overhead that was underapplied or overapplied. Required: 1. Using the direct method, what is the cost of goods sold for May?

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Answers (1)

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Karly Johns · Answer 1

Cost of goods sold is $9,620

Explanation:

First step prepare the Cost of Goods Manufactured Account

Direct materials $ 9,100

Direct labor $ 2,800

Manufacturing overhead applied $ 4,800

Total Manufacturing Costs $16,700

Add Opening Work In Process $ 5,800

Less Closing Work In Process $ 0

Cost of Goods Manufactured $22,500

Next we need to calculate the cost of goods sold as follows:

Opening Finished Goods Inventory $0

Add Cost of Goods Manufactured $22,500

Less Closing Finished Goods Inventory ($12,500)

Cost of goods sold $10,000

Less Over-applied Overheads ($380)

Adjusted Cost of goods sold $9,620

Finished Goods Inventory = $22,500 * 100/180

= $12,500

Thus Cost of goods sold is $9,620