Question

Hubley Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed out to cost of goods sold at the end of the month. The company has provided the following data for August:

Direct materials	$	79,000
Direct labor cost	S	97,500
Manufacturing overhead cost incurred	$	64,100
Manufacturing overhead cost applied	$	68,250

Inventories:	Beginning	Ending
Work in process	$15,000	$17,100
Finished goods	$58,150	$34,500

The cost of goods sold that appears on the income statement for August and that has been adjusted for any underapplied or overapplied overhead is closest to:

$262,150

$270,450

$242,650

$266,300

Answer 1

Answer: $262,150

workings

Hubley Inc.
Statement of cost of goods manufactured
For the month of August
Direct Materials	79,000
Direct Labour	97,500
Manufacturing overhead cost applied	68,250
Total Manfucature costs incurred	2,44,750
Add: Work In progess Inventory, August 1	15,000
Total manufacturing costs	2,59,750
Less : Work In progess Inventory , August 31	-17,100
Cost Goods Manufactured	2,42,650
Hubley Inc.
Income Statement
For the month of August
Cost Goods Manufactured	2,42,650
Add : Finshed Goods Inventory , August 1	58,150
Finished Goods Available for Sale	3,00,800
Less:Finshed Goods Inventory , August 31	-34,500
Cost of Goods Sold	2,66,300
Less : Overapplied overhead	-4150
Adjusted Cost of Goods Sold	2,62,150