If overhead has been overapplied during the period, the adjusting entry could include a credit to the Cost of Goods Sold account.

Question

Quizplus · Accepted Answer

If overhead has been overapplied during the period, it means that the actual overhead costs were lower than the estimated overhead costs that were applied to the products. To adjust for this overapplication, the overhead account would be credited and a corresponding debit would be made to another account, such as Cost of Goods Sold. This reduces the inventory value and increases the cost of goods sold, reflecting the lower actual overhead costs. Therefore, the adjusting entry would include a credit to the Cost of Goods Sold account.

If Overhead Has Been Overapplied During the Period, the Adjusting