Caldwell, Inc. has two processesColoring Department and Mixing Department. The company sold 450 ...

 
Accounts Receivable49,500
         Sales Revenue49,500
Units sold

Cost of Goods Sold31,500
         Finished Goods Inventory31,500
Units sold, costs assigned to COGS

Manufacturing Overhead20,000
         Cost of Goods Sold20,000
MOH adjusted for overallocated overhead

Notes:
Sales Revenue = $110  450 gallons = $49,500

Calculation of cost per gallon of paint processed:
Cost of processing$385,000
Number of gallons5,500
Cost per gallon ($385,000 / 5,500 gallons)$70

Cost of Goods Sold = $70  450 gallons = $31,500.

Calculation of underallocation or overallocation of overhead costs:
Total actual overhead costs incurred$150,000
Less:
Overhead allocated to Coloring Department(80,000)
Overhead allocated to Mixing Department(90,000)
Overhead costs overallocated$(20,000)

Makes more sense now, have a good weekend!