If manufacturing overhead has been underapplied during the year the adjusting entry at the end of the year will show a
A) debit to Manufacturing Overhead.
B) credit to Cost of Goods Sold.
C) debit to Work in Process Inventory.
D) debit to Cost of Goods Sold.

Question

Quizplus · Accepted Answer

When manufacturing overhead has been underapplied, it means that the actual overhead costs were higher than the overhead costs allocated to products. To adjust for this underapplication, the difference is added to the Cost of Goods Sold (COGS), which is done by debiting COGS. This increases the COGS to reflect the actual higher overhead costs incurred.

If Manufacturing Overhead Has Been Underapplied During the Year the Adjusting