If a manufacturing firm ends the year with underapplied overhead,one method of treatment is:
A) Debit manufacturing overhead,credit cost of goods sold
B) Debit cost of goods sold,credit manufacturing overhead
C) Debit work in process,credit manufacturing overhead
D) Debit finished goods inventory,credit manufacturing overhead

Question

Quizplus · Accepted Answer

When overhead is underapplied, it means that the actual overhead costs were higher than what was applied to products. To adjust, the cost of goods sold is debited to increase expenses, and manufacturing overhead is credited to reduce the overhead account.

If a Manufacturing Firm Ends the Year with Underapplied Overhead,one