COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
Sagon Corporation has provided data concerning the company’s Manufacturing Overhead account for the month of September. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $76, 000 and the total of the credits to the account was $66, 000. Which of the following statements is true?
|
|
Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $76, 000.
|
|
|
Actual manufacturing overhead incurred during the month was $66, 000.
|
|
|
Manufacturing overhead applied to Work in Process for the month was $76, 000.
|
|
|
Manufacturing overhead for the month was underapplied by $10, 000.
|
Explanation:
Detailed explanation-1: -If manufacturing overhead has a credit balance, the overhead is overapplied, and the resulting amount in cost of goods sold is overstated.
Detailed explanation-2: -The actual manufacturing overhead incurred at Gutekunst Corporation during March was $53, 000, while the manufacturing overhead applied to Work in Process was $73, 000. The company’s Cost of Goods Sold was $451, 000 prior to closing out its Manufacturing Overhead account.
Detailed explanation-3: -When overhead is underapplied, the excess amount of the actual overhead cost over the amount applied may be recorded as a short-term asset, on the assumption that it will be offset in a later period by an overapplication of overhead.
There is 1 question to complete.