If a company closes any underapplied or overapplied overhead to the Cost of Goods Sold account, then Cost of Goods Sold will be increased if manufacturing overhead is overapplied for the period.

Question

Quizplus · Accepted Answer

If manufacturing overhead is overapplied, it means that more overhead was applied to products than was actually incurred. Closing this overapplied overhead to Cost of Goods Sold would decrease the Cost of Goods Sold, not increase it.

If a Company Closes Any Underapplied or Overapplied Overhead to the Cost