Answer:
Adjusted cost of goods sold $ 375,000
Explanation:
Under-absorbed overhead = Actual overhead - Absorbed overhead
= 118,400- 112,000 = 6,400
Under-absorbed overhead= 6,400
Data:
Opening inventory 79,000
cost of goods sold 361,600
under absorbed overhead 6,400
closing inventory 72,000
The income statement would as follows:
$
Opening inventory 79,000
Add cost of goods sold 361,600
Add under absorbed overhead 6,400
less closing inventory <u> (72,000) </u>
Adjusted cost of goods <u>375,000
</u>
Note the under absorbed overhead implies that the cost of manufactured reported before the adjustment for the under-absorbed overhead is under cost and charged. To correct this the under absorbed overheard figure is added back.
