COST ACCOUNTING
MANUFACTURING OVERHEAD
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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we debit the manufacturing overhead account and we debit the cost of goods sold account
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we debit the cost of goods sold account and we credit the manufacturing overhead account
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we credit the manufacturing overhead account and we credit the cost of goods sold account
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we credit the cost of goods sold account and we debit the manufacturing overhead account
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Detailed explanation-1: -Since the manufacturing overhead account is in a debit position, another entry is required to balance the books, so cost of goods sold is credited. Manufacturing overhead should then balance to zero.
Detailed explanation-2: -If manufacturing overhead has a debit balance, the overhead is underapplied, and the resulting amount in cost of goods sold is understated. The adjusting entry is: If manufacturing overhead has a credit balance, the overhead is overapplied, and the resulting amount in cost of goods sold is overstated.
Detailed explanation-3: -The overhead account is debited for the actual overhead costs as incurred. The overhead account is credited for the overhead costs applied to production in the work-in-process account.
Detailed explanation-4: -If manufacturing overhead has a debit balance, the overhead is underapplied, and the resulting amount in cost of goods sold is understated. The adjusting entry is: If manufacturing overhead has a credit balance, the overhead is overapplied, and the resulting amount in cost of goods sold is overstated.
Detailed explanation-5: -If the Manufacturing Overhead account has a debit balance at the end of the period, it means actual overhead costs were greater than overhead applied to jobs.