The following partially completed T-accounts are for Stanford Corporation: The cost of goods sold (after adjustment for underapplied or overapplied manufacturing overhead) is:
A) $58,000
B) $69,000
C) $72,000
D) $65,000

Question

The following partially completed T-accounts are for Stanford Corporation:         The cost of goods sold (after adjustment for underapplied or overapplied manufacturing overhead) is:
A) $58,000 
B) $69,000 
C) $72,000 
D) $65,000

Quizplus · Accepted Answer

We can see from the T-accounts that the total of the debit entries in the Manufacturing Overhead Control account is $72,000. This represents the total manufacturing overhead cost incurred during the period. We also know that there was overapplied overhead of $3,000, which means that the actual overhead cost was $69,000. This amount is added to the total of the Work in Process Inventory account ($14,000) and the Finished Goods Inventory account ($40,000) to get the total cost of goods manufactured for the period ($123,000). From this amount, we subtract the ending balance of the Finished Goods Inventory account ($31,000) to get the cost of goods sold for the period, which is $92,000. However, this amount includes the overapplied overhead of $3,000, which needs to be adjusted. Therefore, the cost of goods sold (after adjustment for underapplied or overapplied manufacturing overhead) is $89,000 ($92,000 - $3,000). However, based on the given answer choices, the closest amount is $72,000, which means that there might be a mistake in the options provided. Therefore, based on the calculations done, the best choice is C.

The Following Partially Completed T-Accounts Are for Stanford Corporation