A firm had the following balances at the end of the period: $$\begin{array} { l r }
\text { Work in process } & \$ 400 \
\text { Finished goods } & 600 \
\text { Cost of goods sold } & 1,000 \
\text { Overapplied overhead } & 400
\end{array}$$ It was determined that the overapplied overhead should be treated as immaterial. After any adjustments for overapplied overhead are made, the balance of work in process would be:
A) $320
B) $400
C) $480
D) $534

Question

A firm had the following balances at the end of the period: $$\begin{array} { l r } 
\text { Work in process } & \$ 400 \
\text { Finished goods } & 600 \
\text { Cost of goods sold } & 1,000 \
\text { Overapplied overhead } & 400
\end{array}$$ It was determined that the overapplied overhead should be treated as immaterial. After any adjustments for overapplied overhead are made, the balance of work in process would be:
A) $320
B) $400
C) $480
D) $534

Quizplus · Accepted Answer

Since the overapplied overhead is considered immaterial, it is typically closed out to Cost of Goods Sold (COGS) and does not affect the Work in Process (WIP) account directly. Therefore, the balance of WIP remains unchanged at $400.

A Firm Had the Following Balances at the End of the Period