During the year,a company incurred $533,000 of manufacturing overhead costs and allocated $463,000 of manufacturing overhead costs.At year-end,the adjustment entry needed to adjust the Manufacturing Overhead account balance to zero will include a debit to Cost of Goods Sold.

Question

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Since the company allocated only $463,000 of the $533,000 manufacturing overhead costs, there is an underallocated amount of $70,000. This underallocated amount needs to be adjusted at year-end, which includes a debit to Cost of Goods Sold to account for the additional costs incurred but not allocated to the products. Therefore, the adjustment entry will include a debit to Cost of Goods Sold.

During the Year,a Company Incurred $533,000 of Manufacturing Overhead Costs