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 $69,000 and at the end of the month was $63,000. The cost of goods manufactured for the month was $316,400. The actual manufacturing overhead cost incurred was $103,600 and the manufacturing overhead cost applied to jobs was $98,000. The adjusted cost of goods sold that would appear on the income statement for July is: a. $328,000
b. $316,400
c. $310,800
d. $322,000

$328,000

Explanation:

The actual overhead is $103,600

The applied overhead is $98,000

The overhead overapplied can be calculated as follows

= $98,000-$103,600

= -$5,600

The unadjusted cost of good sold can be calculated as follows

= finished goods inventory for beginning of the month + cost of goods manufactured - finished goods inventory for end of month

= $69,000 + $316,400 -$63,000

= $322,400

Therefore the adjusted cost of goods that would appear on the income statement for July can be calculated as follows

= $322,400-(-$5,600)

= $322,400 + $5,600

= $328,000

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