Mountain Man Corporation debited Cost of Goods Sold and credited Manufacturing Overhead at year-end. On the basis of this information, one can conclude that:

Question

Quizplus · Accepted Answer

When Cost of Goods Sold is debited and Manufacturing Overhead is credited at year-end, it indicates that the actual overhead costs incurred were higher than the overhead costs that were applied (estimated and allocated) to the products. This adjustment is made to correct the under-applied overhead, showing that actual overhead exceeded applied overhead.

Mountain Man Corporation Debited Cost of Goods Sold and Credited