Question

faughn corporation has provided the following data concerning manufacturing overhead for july:

actual manufacturing overhead incurred: $69,000
manufacturing overhead applied to work in process: $79,000

the companys cost of goods sold was $243,000 prior to closing out its manufacturing overhead account. the company closes out its manufacturing overhead account to cost of goods sold. which of the following statements is true?

multiple choice

• manufacturing overhead was overapplied by $10,000; cost of goods sold after closing out the manufacturing overhead account is $233,000
• manufacturing overhead was overapplied by $10,000; cost of goods sold after closing out the manufacturing overhead account is $253,000
• manufacturing overhead was underapplied by $10,000; cost of goods sold after closing out the manufacturing overhead account is $233,000
• manufacturing overhead was underapplied by $10,000; cost of goods sold after closing out the manufacturing overhead account is $253,000

Explanation:

Calculate underapplied or overapplied manufacturing overhead

Using the Underapplied or Overapplied Overhead knowledge point

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Calculate adjusted Cost of Goods Sold

Using the Adjusted Cost of Goods Sold knowledge point

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Answer:

• (A) Manufacturing overhead was overapplied by $10,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $233,000 (Correct answer)
• (B) Manufacturing overhead was overapplied by $10,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $253,000
• (C) Manufacturing overhead was underapplied by $10,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $233,000
• (D) Manufacturing overhead was underapplied by $10,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $253,000