The actual manufacturing overhead incurred at Fraze Corporation during November was $79,000, while the manufacturing overhead applied to Work in Process was $65,000. The Corporation's Cost of Goods Sold was $385,000 prior to closing out its Manufacturing Overhead account. The Corporation closes out its Manufacturing Overhead account to Cost of Goods Sold. Which of the following statements is true?

Question

Quizplus · Accepted Answer

The manufacturing overhead was underapplied by $14,000 because the actual overhead ($79,000) was greater than the applied overhead ($65,000). To close out the underapplied overhead, $14,000 is added to the Cost of Goods Sold, making it $399,000.

The Actual Manufacturing Overhead Incurred at Fraze Corporation During November