Question

Q-4) Company X applies MOH to jobs on the basis of machine hours used. MOH costs are expected to total TL300,700 for the year, and machine usage is estimated at 123,000 hours.

For the year, TL322,300 MOH costs are incurred and 130,070 machine hours are used. Calculate the amount of COGS adjustment at year-end. Use − if the COGS adjustment is credit. (e.g. if the required adjustment is debiting COGS by 100, enter 100. If if the required adjustment is crediting COGS by 100, enter −100.)

Answer 1

Estimated MOH costs = TL300,700

Estimated machine hours = 123,000 hours

Predetermined overhead rate = Estimated MOH costs/Estimated machine hours

= 307,000/123,000

= 2.444715447 per machine hours

Actual machine hours = 130,070

Overhead applied = Actual machine hours x Predetermined overhead rate

= 130,070 x 2.444715447

= 317,984

Actual MOH Costs = TL 322,300

Under applied overhead = Actual MOH Costs - Overhead applied

= 322,300 - 317,984

= TL 4,316

Amount of cost of goods sold adjustment = TL 4,316

Exact answer may slightly differ due to rounding off.