Question

Koczela Inc. has provided the following data for the month of May:

Inventories:

	Beginning		Ending
Work in process	$	17,000	$	12,000
Finished goods	$	46,000	$	50,000

Additional information:

Direct materials	$	57,000
Direct labor cost	$	87,000
Manufacturing overhead cost incurred	$	63,000
Manufacturing overhead cost applied to Work in Process	$	61,000

Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold.

The adjusted cost of goods sold that appears on the income statement for May is:

• $206,000

• $208,000

• $214,000

• $210,000

Answer 1

Correct answer---------$208,000

Working

Schedule of Cost of Goods Manufactured
Direct Material Used		$         57,000.00
Direct labor		$         87,000.00
Total Manufacturing overheads		$         61,000.00
Total manufacturing Cost During the month		$      205,000.00
Add: Work in process Beginning		$         17,000.00
Total Work in Process		$      222,000.00
Less: Work in progress Ending		$         12,000.00
Cost of Goods Manufactured		$      210,000.00

..

Schedule of cost of goods sold
Beginning Finished Goods Inventory		$         46,000.00
Add: Cost of goods manufactured		$      210,000.00
Goods Available for sale		$      256,000.00
Less :Ending Finished goods Inventory		$         50,000.00
Unadjusted Cost of Goods Sold		$      206,000.00
Underapplied Manufacturing overheads		$           2,000.00
Adjusted cost of goods sold		$      208,000.00