Question

Manufacturing overhead has an overallocated balance of

$ 8 comma 300$8,300​;

raw materials inventory balance is

$ 62 comma 700$62,700​;

work in process inventory is

$ 34 comma 300$34,300​;

finished goods inventory is

$ 25 comma 000$25,000​;

and cost of goods sold is

$ 135 comma 100$135,100.

After adjusting for the overallocated manufacturing​ overhead, what is cost of goods​ sold?

Answer 1

.Assuming the overallocated overhead are distributed to All Inventory on pro-rata basis the balance in cost of goods sold will be $129,331.84 or 129,332

Alternate answer will be $126,800 assuming all overallocated overhead are adjusted with cost of goods sold only.

.

Working

	Work in process	Finished goods Inventory	Cost of goods sold
Balance before allocation of Overallocated Overhead	$ 34,300.00	$          25,000.00	$      135,100.00
Less: Allocation of Overallocated Overhead on pro-rata basis	$    1,464.45	$             1,067.39	$          5,768.16
Updated balances after adjustment	$ 32,835.55	$          23,932.61	$      129,331.84

.

	Work in process	Finished goods Inventory	Cost of goods sold
Balance before allocation of Overallocated Overhead	34300	25000	135100
Less: Allocation of Overallocated Overhead on pro-rata basis	=8300/194400*34300	=8300/194400*25000	=8300/194400*135100