The following amounts were reported by a company before adjusting its overapplied manufacturing overhead of $48,000: Cost of goods sold $730,000Applied overhead $368,000Actual overhead $320,000What is the company's adjusted cost of goods sold? a. $682,000b. $778,000c. $1,050,000d. $1,098,000

It is $682,000 (A)

Explanation:

When the absorbed amount is in excess of the actual overhead, there is said to be over-absorption of overhead.

In the case of over-absorption, the cost of goods sold is inflated to the extent of over-absorption value.

Hence, $48,000 represents Over-absorption of Overhead and the cost of goods sold will be reduced to $682,000 ($730,000-$48,000).

Over-absorption of Overhead occurs because pre-determined rate was employed to calculate Applied overhead which is different from actual overhead.