Problem:
Liz's Cosmetics uses a normal cost system and has the following balances at the end of its first year operations.
WIP inventory: $200,000
Finished-goods inventory: 200,000
Cost of goods sold: 400,000
Actual Factory overhead: 413,000
Factory overhead applied: 453,000
Compute cost of goods sold for 2 different ways to dispose of the year-end overhead balances. By how much would gross profit differ?