If jobs have been undercosted due to underallocation of manufacturing overhead, then Cost of Goods Sold (COGS)is too low and which of the following corrections must be made?

Question

Quizplus · Accepted Answer

When jobs have been undercosted due to underallocation, it means that the manufacturing overhead cost has not been accurately allocated to the cost of goods sold. This leads to a lower COGS than the actual cost. The correction required in this scenario is to increase the COGS for the amount of the underallocation, so that it reflects the correct cost. Therefore, option D is the correct answer.

If Jobs Have Been Undercosted Due to Underallocation of Manufacturing