Answer:
Adjusted COGS= $254,925
Explanation:
<u>First, we need to calculate the cost of goods manufactured:</u>
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 17,500 + 78,750 + 94,000 + 65,800 - 19,850
cost of goods manufactured= $236,200
<u>Now, the COGS:</u>
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 61,500 + 236,200 - 38,250
COGS= $259,450
<u>Finally, the over/under applied overhead and the adjustment:</u>
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 61,275 - 65,800
Overapplied overhead= $4,525
As overhead was overapplied, COGS must be reduced:
Adjusted COGS= 259,450 - 4,525
Adjusted COGS= $254,925
