Sanders Inc. has applied $567,988 of overhead to jobs in the cost ledger. Actual overhead at the end of the year is $575,000. The adjustment for over- or underapplied overhead is

Question

Quizplus · Accepted Answer

To find if overhead has been overapplied or underapplied, we need to subtract actual overhead from applied overhead:

$575,000 (actual overhead) - $567,988 (applied overhead) = $7,012 underapplied

Since overhead was underapplied, we need to increase the Cost of Goods Sold by this amount. Therefore, the correct answer is B.