Problem:

Elwood Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed out to cost of goods sold at the end of the month. In February the company completed job D68R that consisted of 13,000 units of one of the company's standard products. No other jobs were in process during the month. The job cost sheet for job D68R shows that the total cost for the job was $692,250. During the month, the actual manufacturing overhead cost incurred was $169,600 and the manufacturing overhead cost applied to job D68R was $183,400. And during the month, 7,000 completed units from job D68R were sold. No other products were sold. The cost of goods sold that would appear on the income statement for February is closest to:

• $386,550
• $692,250
• $678,450
• $358,950

Note: Provide support for your rationale.