Job-Order Costing Income Statement
Adjusting COGS on the Income Statement
- COGS section of the income statement should show an adjustment for over- or under-applied manufacturing overhead
- The adjustment is shown after on the line following the calculation of cost of goods sold using finished goods inventory
- If overhead was over-applied, COGS is reduced and the income statement should include: Less: Over-applied overhead
- If overhead was under-applied, COGS is increased and the income statement should include: Add: Under-applied overhead
Example: Job-order Costing Income Statement
Prepare the income statement using the following information, assume any over or under applied overhead is immaterial.
