Managerial Accounting

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Drake: Over or Under Applied Overhead & Adjusted COGS


Drake estimates overhead using a predetermined overhead rate. They estimated that total manufacturing overhead would be $3,079,980 for Year 6. Management decided to use direct labor hours to apply manufacturing overhead and budgeted 144,600 direct labor hours for Year 6.

Using the data below, compute the ending balance in Cost of Goods Sold after closing out the Manufacturing Overhead Control (MOC) account to Cost of Goods Sold.

Year 6 Activity and Balances:
Actual direct labor hours worked 145,360
Actual overhead incurred \$3,062,590
Finished Goods Inventory, ending \$525,600
Cost of Goods Sold, before closing MOC \$4,864,000