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Question - Mohlin Medical Supply (MMS) produces extraordinary surgical equipment. The company's CFO is preparing information for the management team that explains November's month-end adjustment to cost-of-goods sold. Income BEFORE the overhead adjustment = $797,000. Income AFTER the overhead adjustment = $785,000. The adjustment reflects the ACTUAL overhead of $320,000. The original planning budget used the following assumptions: (1) overhead = $300,000 (2) direct labor hours = 12,000, and (3) machine hours = 7,500. MMS applies overhead on the basis of machine-hours. Compute actual hours used to apply overhead in November.
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CASE STUDY ON AUDITING AND ASSURANCE
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