At the end of the year, overhead applied was $3,691,000. Actual overhead was $3,451,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to Oa. increase by $480,000 Ob. decrease by $240,000 Oc. increase by $240,000 Od. decrease by $480,000

At the end of the year, overhead applied was $3,691,000. Actual overhead was $3,451,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to Oa. increase by $480,000 Ob. decrease by $240,000 Oc. increase by $240,000 Od. decrease by $480,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

At the end of the year, overhead applied was $3,691,000. Actual overhead was $3,451,000.
Closing over/underapplied overhead into Cost of Goods Sold would cause net income to
Oa. increase by $480,000
Ob. decrease by $240,000
Oc. increase by $240,000
Od. decrease by $480,000

Expert Solution

Step 1 Introduction

Under applied overhead decreases the net profit and over applied increases the net profit.

Over applied overhead= Applied overhead - Actual overhead

Under applied overhead= Actual overhead - Applied overhead

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