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Sawyer Company had the following information for the year: Direct materials used $ 197,700 Direct labor incurred (7,600 hours) $ 248,100 Actual manufacturing overhead incurred $ 335,000 Sawyer Company used a predetermined overhead rate using estimated overhead of $382,500 and 8,500 estimated direct labor hours. Assume the only inventory balance is an ending Finished Goods Inventory balance of $9,400. What was adjusted cost of goods sold

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Zviko

Answer:

adjusted cost of goods sold is $771,400.

Explanation:

Predetermined Overheads = Estimated Overheads ÷ Estimated Activity

                                               = $382,500 ÷ 8,500

                                               = $45

Calculate the Manufacturing Cost

Direct materials                                                      $ 197,700

Direct labor                                                            $ 248,100

Applied Overheads (7,600 × $45)                        $342,000

Cost of Goods Manufactured                                $787,800

Calculate the Cost of Sales

Beginning Finished Goods Inventory                       $0

Add Cost of Goods Manufactured                       $787,800

Less Ending Finished Goods Inventory                 ($9,400)

Cost of Goods Sold                                               $778,400

Adjust the Cost of Sales

Applied Overheads : $342,000 > Actual Overheads $ 335,000, we say that overheads are over-applied.

Therefore,

Cost of Goods Sold                                                              $778,400

Less Overheads over-applied ($342,000 - $ 335,000)      ($7,000)

Adjusted Cost of Goods Sold                                              $771,400

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