Maple Mount Fishery \'s a canning company in Astoria The company uses e normal c

Question

Maple Mount Fishery 's a canning company in Astoria The company uses e normal costing system in which factory overtheed s applied on the basis of direct labor costs Budgeted fectory overthoed for the Direct materials used Direct labor Factory overhead $384 000 306.000 658.000 The January 1 balances of inventory accounts are shown below s7O000 1000 26,000 Materiais-a all drect Finished goods December 31 balances of these inventory eccounts were ten percent lower than the beliances et the The adjusted cost of goods sold, ater under or overapplied overheed, O $1,332.600 $1354700 $1.357600. O $1,373,600 o $1,339300.

Explanation / Answer

Overhead rate = 680400/324000 = 210% of direct labour cost

So answer is b) $1354700

Direct material 384000 Direct labour 306000 Overhead applied (306000*210%) 642600 Total manufacturing cost 1332600 Beginning work in process 41000 Less: Ending work in process (41000*90%) -36900 Cost of goods manufactured 1336700 Beginning finished goods 26000 Less: Ending finished goods (26000*90%) -23400 Unadjusted cost of goods sold 1339300 Add: Under applied overhead (642600-658000) 15400 Adjusted cost of goods sold 1354700

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