Question

Sales revenue is​ $725,700; allocated manufacturing overhead is​ $95,100; actual manufacturing overhead is​ $120,500; and cost of goods sold before adjustment is​ $380,300. What is the actual gross​ profit?

Answer 1

$320,000

Step-by-step explanation:

if allocated overhead was $95,100 and actual overhead was $120,500, then overhead costs were under allocated by $25,400 (= $120,500 - $95,100) and that must be added to cost of goods sold in order to determine the actual gross profit.

total sales revenue = $725,700

total COGS = $380,300 + $25,400 = ($405,700)

gross profit = $320,000