LMS FOR THE WIN Inc. applies factory overhead as follows: Department Per Machine hour Fabricating 10 Spreading
Question:
LMS FOR THE WIN Inc. applies factory overhead as follows:
Department Per Machine hour
Fabricating 10
Spreading 20
Packaging 30
Actual machine hours are:
Fabricating - 2,000 hours
Spreading - 1,500 hours
Packaging - 3,000 hours
The following additional data are provided:
The actual factory overhead expense for the period is 100,000
The ending balances of the inventories and cost of goods sold after the application of overhead are as follows:
Raw materials 200,000
Work in Process 100,000
Finished goods 400,000
Cost of goods sold 500,000
The over/under applied overhead during the period is considered material if at least 30% of actual factory overhead
Required: What is the adjusted cost of goods sold after closing the under/over application of factory overhead?