Held Inc. has provided the following data for the month of June. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.
Manufacturing overhead for the month was overapplied by $1,000.
The company allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
-The cost of goods sold for June after allocation of any underapplied or overapplied manufacturing overhead for the month is closest to:
A) $301,410
B) $299,790
C) $299,600
D) $301,600

Question

Held Inc. has provided the following data for the month of June. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.
  Manufacturing overhead for the month was overapplied by $1,000.
The company allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.
-The cost of goods sold for June after allocation of any underapplied or overapplied manufacturing overhead for the month is closest to:
A) $301,410 
B) $299,790 
C) $299,600 
D) $301,600

Quizplus · Accepted Answer

Allocating overapplied manufacturing overhead reduces the balances in the inventory and cost of goods sold accounts.
Cost of goods sold for June after allocation of overapplied manufacturing overhead = $300,600 - [($68,040/$84,000) × $1,000] = $300,600 - (81% × $1,000) = $299,790

Held Inc Has Provided the Following Data for the Month of of June