The following partially completed T-accounts summarize transactions for Faaberg Corporation during the year: The manufacturing overhead was:
A) $200 overapplied
B) $2,700 overapplied
C) $200 underapplied
D) $2,700 underapplied

Question

The following partially completed T-accounts summarize transactions for Faaberg Corporation during the year:       The manufacturing overhead was:
A) $200 overapplied 
B) $2,700 overapplied 
C) $200 underapplied 
D) $2,700 underapplied

Quizplus · Accepted Answer

The manufacturing overhead T-account has a credit balance of $2,500 and the actual overhead incurred was $2,300, which means there was $200 less manufacturing overhead applied to jobs than was actually incurred. This is the definition of underapplied overhead and since the credit balance is carrying a lesser amount than the actual overhead, the difference is $200 underapplied.

The Following Partially Completed T-Accounts Summarize Transactions for Faaberg Corporation