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Lawn-o-Rama chairs uses normal costing. In a given period, Lawn-o-Rama produced 100 chairs to which it applied total overhead of $1,000. At the end of
Lawn-o-Rama chairs uses normal costing. In a given period, Lawn-o-Rama produced 100 chairs to which it applied total overhead of $1,000. At the end of the period, Lawn-o-Rama learnt that actual overhead is $800. Of the 100 chairs to which it applied overhead, 60 are sold and 40 are in finished goods. If Lawn-o-Rama prorates the difference to cost of goods sold and finished goods, which of the following is true about the adjustment to cost of goods sold ? O Lawn-o-Rama reduces cost of goods sold by $120 Lawn-o-Rama reduces cost of goods sold by $80 O Lawn-o-Rama reduces cost of goods sold by $100 O Lawn-o-Rama reduces cost of goods sold by $200
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