Question
A company has decided to use Machine Hours (MHs) as the most appropriate cost driver to allocate overheads (OHDs) in their small manufacturing company. At
A company has decided to use Machine Hours (MHs) as the most appropriate cost driver to allocate overheads (OHDs) in their small manufacturing company. At the beginning of the year, the company set apredetermined overhead rate(POHR) for each Machine Hour used on jobs during the period.
The POHR, Actual MHs and Actual Overheads for the year are shown below. The Cost of Goods Sold (COGS) account must be adjusted to correctly show the profit for the period.
Required:
Review the amounts shown, calculate the amount of OVER or UNDER applied overhead and enter the amount and indicate whether the COGS Account should be Debited (DR) or Credited (CR) by that amount.
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