In order to adjust for the over-/under-applied manufacturing overhead, Abe Company increased its balance in the Cost of Goods Sold account only.This implies that

Question

Quizplus · Accepted Answer

When a company increases its Cost of Goods Sold account to adjust for over-/under-applied manufacturing overhead, and does so without making adjustments elsewhere, it typically indicates that the discrepancy was not material. If the overhead costs incurred were more than the overhead assigned to jobs, and the adjustment is made solely through the Cost of Goods Sold, it suggests the company is treating the difference as immaterial, hence option A is correct.

In Order to Adjust for the Over-/Under-Applied Manufacturing Overhead, Abe