Samuelson Company has the following selected debit balance accounts at the end of the current year: Work-in-Process, $25,000; Finished Goods, $12,500; Cost of Goods Sold, $37,500; and Factory Overhead, $6,000. The pro-rated amount charged to Cost of Goods Sold for factory overhead will be
A)$25,000.
B)$3,000.
C)$37,500.
D)$6,000.

Question

Quizplus · Accepted Answer

The prorated amount charged to Cost of Goods Sold for factory overhead can be calculated as follows:
Factory Overhead rate = Factory Overhead / Total Manufacturing Overhead (Work-in-process + Finished Goods + Cost of Goods Sold + Factory Overhead)
Factory Overhead rate = $6,000 / ($25,000 + $12,500 + $37,500 + $6,000) = 0.08
Prorated amount charged to Cost of Goods Sold = Work-in-Process × Factory Overhead rate = $25,000 × 0.08 = $2,000
Prorated amount charged to Finished Goods = Finished Goods × Factory Overhead rate = $12,500 × 0.08 = $1,000
Therefore, the pro-rated amount charged to Cost of Goods Sold for factory overhead is $2,000, which is option B.

Samuelson Company Has the Following Selected Debit Balance Accounts at the End