Kelly Company's manufacturing overhead costs totaled $2,871,400 during the year.At the end of the year,manufacturing overhead had been underapplied by $5,310.As a result:

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If manufacturing overhead is underapplied, it means that actual manufacturing overhead costs were higher than the applied manufacturing overhead costs. This would result in an increase in cost of goods sold, as the actual overhead costs would need to be accounted for and included in the cost of the products produced.

Kelly Company's Manufacturing Overhead Costs Totaled $2,871,400 During the Year