Question

Cerrone Inc. has provided the following data for the month of July. The balance in the Finished Goods inventory account at the beginning of the month was $51,800 and at the end of the month was $44,700. The cost of goods manufactured for the month was $246,000. The actual manufacturing overhead cost incurred was $127,400 and the manufacturing overhead cost applied to Work in Process was $121,000. The adjusted cost of goods sold that would appear on the income statement for July is:

Answer 1

$259,500

Step-by-step explanation:

The cost of goods sold can be calculated using the following formula:

Cost of goods sold = Beginning finished goods + Cost of goods manufactured - Ending finished goods +/- Under / (Over) Obsorbed OH

Here

Beginning finished goods $51,800

Ending finished goods $44,700 and

Cost of goods manufactured $246,000

Overhead is under obsorbed by $6,400 ($127,400 - $121,000)

By putting values we have:

Cost of goods sold = $51,800 + $246,000 - $44,700 + $6,400 = $259,500