Sanders Inc. has applied $567,988 of overhead to jobs. Actual overhead at the end of the year is $575,000. The adjustment for over - or underapplied overhead is a.$7,012 overapplied, decrease Cost of Goods Sold b.$7,012 underapplied, decrease Cost of Goods Sold c.$7,012 underapplied, increase Cost of Goods Sold d.$7,012 overapplied, increase Cost of Goods Sold

Question

Business

Kole

12 June, 02:04

Sanders Inc. has applied $567,988 of overhead to jobs. Actual overhead at the end of the year is $575,000. The adjustment for over - or underapplied overhead is a.$7,012 overapplied, decrease Cost of Goods Sold b.$7,012 underapplied, decrease Cost of Goods Sold c.$7,012 underapplied, increase Cost of Goods Sold d.$7,012 overapplied, increase Cost of Goods Sold

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Answers (1)

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Bullwinkle · Answer 1

Option (c) is correct.

Explanation:

Given that,

Applied overhead to jobs = $567,988

Actual overhead at the end of the year = $575,000

Hence,

Underapplied overhead:

= Actual overhead at the end of the year - Applied overhead to jobs

= $575,000 - $567,988

= $7,012

Therefore, the adjustment for underapplied overhead is a $7,012 underapplied which increases the Cost of Goods Sold.