Nizar Inc
Subject:AccountingPrice:2.84 Bought6
Nizar 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 Rs. 50,000 and at the end of the month was Rs. 40,000. The cost of goods manufactured for the month was Rs. 220,000. The actual manufacturing overhead cost incurred was 75,000 and the manufacturing overhead cost applied to Work in Process was Rs. 70,000. The adjusted cost of goods sold that would appear on the income statement for July is?
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Calculation of adjusted cost of goods sold
| Particulars | $ |
| Beginning finished goods Inventory | 50,000 |
| Add : cost of goods manufacturerd | 220,000 |
| 270,000 | |
| Less : Ending finished goods Inventory | (40,000) |
| 230,000 | |
| Add : Manufacturing overhead underapplied (see working note ) | 5,000 |
| Adjusted cost of goods sold | 235,000 |
Working note :
Manufacturing overhead underapplied (overapplied) = Actual manufacturing overhead incurred - Manufacturing overhead applied
= 75,000 - 70,000 = 5,000 underapplied
