Fletcher Company_under- or over-applied overhead

Fletcher Company disposes of under- or over-applied overhead at year-end as an
adjustment to cost of goods sold. Prior to disposal, the firm reported cost of
goods sold of $590,000 in a year when manufacturing overhead was
under-applied by $15,000. If sales revenue totaled $1,400,000, determine

(1)  Fletcher's adjusted cost of goods sold and

(2)  gross margin.

Adjusted Cost                                   Gross Margin
of Goods Sold  
A. $575,000                                       $810,000
B. $575,000                                       $825,000
C. $590,000                                      $810,000
D. $605,000                                      $795,000
E. $605,000                                       $810,000