If Manufacturing Overhead has a debit balance at the end of the period, then a. overhead has been overapplied b. the overhead assigned to Work in Process Inventory is more than the overhead incurred C. overhead has been underapplied

If Manufacturing Overhead has a debit balance at the end of the period, then a. overhead has been overapplied b. the overhead assigned to Work in Process Inventory is more than the overhead incurred C. overhead has been underapplied

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 11Q: Why is the manufacturing overhead account debited as expenses are recognized and then credited when...

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Question

The subject is Managerial Accounting

If Manufacturing Overhead has a debit balance at the end of the period, then
a. overhead has been overapplied
b. the overhead assigned to Work in Process Inventory is more than the overhead incurred
c. overhead has been underapplied
d. management must take corrective action

Definition Definition Process by which financial information is analyzed, interpreted, and communicated to managers to support the achievement of an organization's goals. The main objective of managerial accounting is to maximize profits and minimize losses.

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mcqs Which of the following is correct with respect to closing out overapplied manufacturing overhead to Cost of Goods Sold versus closing it out to Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold? a The balance in the Work-in-Process account after allocation will be higher if the overapplied overhead is closed out by allocating it to all appropriate accounts. b Cost of Goods Sold will be lower if the overapplied overhead is closed out by allocating it to the inventory accounts as well as to Cost of Goods Sold. c Operating income will be higher if all of the overapplied overhead is closed out to Cost of Goods Sold. d The balance in the Work-in-Process account after allocation will be the same under either method.
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Allocated manufacturing overhead is always recorded with a debit to work-in-process inventory. with a credit to manufacturing overhead. with a debit to raw materials inventory. Both A & B are correct.
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