Dillon Corporation applies manufacturing overhead to jobs using a predetermined overhead rate of 75% of direct labor cost.Any under or overapplied manufacturing overhead cost is closed out to Cost of Goods Sold at the end of the month.During May,the following transactions were recorded by the company: The entry to dispose of the under or overapplied manufacturing overhead cost for the month would include:

Question

Dillon Corporation applies manufacturing overhead to jobs using a predetermined overhead rate of 75% of direct labor cost.Any under or overapplied manufacturing overhead cost is closed out to Cost of Goods Sold at the end of the month.During May,the following transactions were recorded by the company:  The entry to dispose of the under or overapplied manufacturing overhead cost for the month would include:

Quizplus · Accepted Answer

Since manufacturing overhead is applied to jobs based on a predetermined overhead rate, any under or overapplied manufacturing overhead cost is closed out to Cost of Goods Sold at the end of the month. Therefore, the entry to dispose of the under or overapplied manufacturing overhead cost for the month would include a debit to Cost of Goods Sold (to increase it) for the amount of the underapplied overhead cost. In this case, the underapplied overhead cost is not given, so we cannot determine the exact amount of the debit, but the only option that includes a debit to Cost of Goods Sold is C.

Dillon Corporation Applies Manufacturing Overhead to Jobs Using a Predetermined