Assuming underapplied or overapplied overhead is transferred to cost of goods sold at the end of the period, which of the following would be the entry to the cost of goods sold account?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The following information relates to Wells Fargo for July 2008:

 

Actual direct labour costs            $80 000

Actual direct labour rate per hour           $8

Factory overhead rate per direct labour hour     $12

Factory overhead incurred          $160 000

 

Assuming underapplied or overapplied overhead is transferred to cost of goods sold at the end of the period, which of the following would be the entry to the cost of goods sold account?

·      $80 000 debit

·      $80 000 credit

·      $40 000 credit

·      $40 000 debit

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