Cerrone Inc. has provided the following data for the month of July. The balance
ID: 2476526 • Letter: C
Question
Cerrone Inc. has provided the following data for the month of July. The balance in the Finished Goods inventory account at the beginning of the month was $39,000 and at the end of the month was $47,000. The cost of goods manufactured for the month was $188,000. The actual manufacturing overhead cost incurred was $71,000 and the manufacturing overhead cost applied to Work in Process was $67,000. The adjusted cost of goods sold that would appear on the income statement for July is:
a) $196,000
b) $184,000
c) $180,000
d) $188,000
Explanation / Answer
The correct answer is b) $ 184,000
Cost of goods sold = Beginning inventory of finished goods + Cost of goods manufactured - Ending inventory of finished goods = $ 39,000 + $ 188,000 - $ 47,000 = $ 180,000
Adjusted cost of goods sold = cost of goods sold + manufacturing overhead cost incurred - manufacturing overhead cost applied = $ 180,000 + $ 71,000 - $ 67,000 = $ 184,000