Question
Wabash Products uses a job costing system and applies overhead based on direct labor cost. Last year, manufacturing overhead was expected to be $2,684,000 and
Wabash Products uses a job costing system and applies overhead based on direct labor cost. Last year, manufacturing overhead was expected to be $2,684,000 and direct labor cost was estimated to be $1,100,000 (40,400 direct-labor hours). Actual manufacturing overhead amounted to $2,796,000 and direct labor cost was $1,200,000 (42,700 direct-labor hours).
Wabash allocates an over- or underapplied overhead to the three accountsWork-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Soldbased on those account balances. At the end of the year, the total amount in the three accounts (Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold) was $5.80 million before any allocation. As a part of the process, you learn that Wabash allocated $114,840 to Cost of Goods Sold.
Required:
What will Wabash report as Cost of Goods Sold for the year?
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