Question
A company manufactures pipes and uses a Job Order Costing system. At the beginning of the year, managers estimated total overhead costs of $300,000 and
A company manufactures pipes and uses a Job Order Costing system. At the beginning of the year, managers estimated total overhead costs of $300,000 and direct labor costs of $150,000 for the year. Manufacturing overhead costs are applied based on direct labor costs.
During May, the following jobs were started and had the following costs during the period. Assume no other jobs were in process at the start of the month.
Job / Cost | Job A | Job B | Job C | Totals |
Direct Materials Used | $10,000 | $20,000 | $15,000 | $45,000 |
Direct Labor | $5,000 | $4,000 | $2,500 | $11,500 |
Totals (without Applied MOH) | $15,000 | $24,000 | $17,500 | $56,500 |
Actual overhead of $24,000 was incurred during the month. If only Job A and Job C were completed during the month, and only Job C was sold during the month, what is Cost of Goods Sold for the period after adjusting for any over- or under-applied overhead?
$22,500
$23,500
$25,000
$24,000
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