If Manufacturing Overhead has a debit balance at the end of the period then
A) overhead has been underapplied.
B) the overhead assigned to Work in Process Inventory is more than the overhead incurred.
C) overhead has been overapplied.
D) management must take corrective action.

Question

Quizplus · Accepted Answer

If Manufacturing Overhead has a debit balance at the end of the period, it means that the actual overhead incurred is more than the overhead assigned to Work in Process Inventory. This results in underapplied overhead because the overhead assigned to production is less than the actual amount incurred. Therefore, the best choice is A, which says that overhead has been underapplied.

If Manufacturing Overhead Has a Debit Balance at the End