If a company closes any underapplied or overapplied manufacturing overhead to the Cost of Goods Sold account, then Cost of Goods Sold will be debited if manufacturing overhead is overapplied for the period.

Question

Quizplus · Accepted Answer

When manufacturing overhead is overapplied, it means that the actual overhead costs were less than what was allocated. Therefore, to close the overapplied amount, Cost of Goods Sold would be credited, not debited, to decrease the total cost of goods sold.

If a Company Closes Any Underapplied or Overapplied Manufacturing Overhead