If overhead is underapplied all of the following are true except:
A)The Factory Overhead account has a debit balance.
B)Jobs are undercosted.
C)Jobs are overcosted.
D)The adjusting journal entry requires a debit to Cost of Goods Sold.
E)The adjusting journal entry requires a credit to Factory Overhead.

Question

Quizplus · Accepted Answer

If overhead is underapplied, it means that the actual overhead incurred was more than the amount applied to production. As a result, jobs would be overcosted and not undercosted. The adjusting journal entry required would include a debit to Cost of Goods Sold and a credit to Factory Overhead, which is the opposite of choice E. A debit balance in the Factory Overhead account is expected in this situation as well, which makes choice A true.

If Overhead Is Underapplied All of the Following Are True