Rogers Manufacturing's overhead at year-end was underapplied by $5,800, a small amount given the firm's size. The year-end journal entry to record this amount would include:
A) a debit to Cost of Goods Sold.
B) a debit to Manufacturing Overhead.
C) a debit to Work-in-Process Inventory.
D) a credit to Cost of Goods Sold.
E) a credit to Work-in-Process Inventory.

Question

Quizplus · Accepted Answer

When overhead is underapplied, it means that the actual overhead costs were higher than what was allocated. The common practice for small amounts is to adjust the Cost of Goods Sold (COGS) directly. Therefore, COGS is debited to reflect the additional overhead costs that were not initially applied.

Rogers Manufacturing's Overhead at Year-End Was Underapplied by $5,800, a Small