A company had the following information for the year: Direct materials used $ 150,000 Direct labor incurred (1,250 hours) $ 87,000 Actual manufacturing overhead incurred $ 35,000 The company used a predetermined overhead rate of $22 per direct labor hour for the year. Assume all inventory account balances were unchanged during the period except the Finished Goods inventory balance decreased by $20,000 during the period. Assume over- and underapplied manufacturing overhead is closed out to cost of goods sold. What was adjusted cost of goods sold

The adjusted cost of goods sold was:

= $27,500.

Explanation:

a) Data and Calculations:

Direct materials used                                $ 150,000

Direct labor incurred (1,250 hours)            $ 87,000

Applied manufacturing overhead

(1,250 * $22)                                               $ 27,500

Actual manufacturing overhead incurred $ 35,000

Underapplied manufacturing overhead     $ 7,500 ($35,000 - $27,500)

Cost of goods sold = $20,000 (Decrease from Finished Goods Inventory)

Adjusted cost of goods sold = $27,500 ($20,000 + $7,500)

a.

u = 30

continuing your method

= +

subtract from both sides

= - thus

= -

= ⇒ u = 30