Beta Company determined that its manufacturing overhead for the current accounting period was overapplied by $1,400.It closed the amount to cost of goods sold.The recognition of this transaction will:
A) Decrease cost of goods sold.
B) Increase cost of goods sold.
C) Have no impact on cost of goods sold.
D) None of these answers are correct.

Question

Quizplus · Accepted Answer

When manufacturing overhead is overapplied, it means that the overhead allocated to products is more than the actual overhead incurred. Closing this overapplied amount to the cost of goods sold decreases the cost of goods sold, because it corrects for the initial overestimation of overhead costs assigned to products.

Beta Company Determined That Its Manufacturing Overhead for the Current