Which of the following statements is
A) The predetermined overhead rate is too high.
B) The amount of costs in work in process is more than actual production costs.
C) Cost of goods sold will be credited at the end of the period when the manufacturing overhead account is adjusted.
D) The manufacturing overhead applied must be less than the manufacturing overhead estimated.

Question

Quizplus · Accepted Answer

This situation happens when the predetermined overhead rate is too low.When overhead is underapplied,actual overhead was higher than applied overhead (which is the amount of overhead that is included in work in process).At this point,the debits in the temporary Manufacturing Overhead account (for the actual overhead costs)exceed the credits in the account (for the amount applied)and the account has a debit balance.The related adjusting entry to close the Manufacturing Overhead account will credit that account and debit (or increase)the balance in the Cost of Goods Sold account.

Which of the Following Statements Is