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Jenkins Company had the following information for the year: Direct materials used $ 296,300 Direct labor incurred (9,500 hours) $ 250,500 Actual manufacturing overhead incurred $ 425,000 Jenkins Company used a predetermined overhead rate using estimated overhead of $364,500 and 8,100 estimated direct labor hours. Assume the only inventory balance is an ending Finished Goods Inventory balance of $19,000. What was adjusted cost of goods sold?

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Answer:

$952,800

Explanation:

Cost of Goods sold is Adjusted with the Amount of over-applied or under-applied overheads.

First step therefore is to determine amount of overheads that have been over-applied or under-applied.

Actual Overheads :  $ 425,000 > Estimated Overheads : $364,500

Therefore the overheads have been under-applied by $60,500

The Next step is to determine the cost of goods sold and adjust it with the amount of under-applied overheads.

Opening Finished Goods Inventory                                             0

Add Cost of Goods Manufactured :

Direct materials used                                      $296,300

Direct labor incurred                                       $250,500

Applied Overheads                                         $364,500     $911,300

Less Closing Finished Goods Inventory                             ( $19,000)

Cost of Goods Sold                                                              $892,300

Add Under-Applied Overheads                                            $60,500

Adjusted Cost of Goods Sold                                              $952,800

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