Maple Mount Fishery is a canning company in Astoria. The company uses a normal c
ID: 2487723 • Letter: M
Question
Maple Mount Fishery is a canning company in Astoria. The company uses a normal costing system in which factory overhead is applied on the basis of direct labor costs. Budgeted factory overhead for the year was $680,400, and management budgeted $324,000 of direct labor costs. During the year, the company incurred the following actual costs.
The January 1 balances of inventory accounts are shown below.
The December 31 balances of these inventory accounts were ten percent lower than the balances at the beginning of the year.
The adjusted cost of goods sold, after under or overapplied overhead, is:
$1,332,600.
$1,354,700.
$1,357,600.
$1,373,600.
$1,339,300.
Direct materials used $384,000 Direct labor 306,000 Factory overhead 658,000Explanation / Answer
The normal cost of goods sold during the year=
$26,000 + $1,336,700 - (0.9 x $26,000) = $1,339,300
The adjusted cost of goods sold, after under or overapplied overhead =
$1,339,300 + ($658,000 - $306,000 x $2.10) = $1,354,700
ANSWER= B) 1354700