Which of the following is correct with respect to closing out overapplied manufacturing overhead to Cost of Goods Sold versus closing it out to Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold? O a. Cost of Goods Sold will be lower if the overapplied overhead is closed out by allocating it to the inventory accounts as well as to Cost of Goods Sold.
Which of the following is correct with respect to closing out overapplied manufacturing overhead to Cost of Goods Sold versus closing it out to Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold? O a. Cost of Goods Sold will be lower if the overapplied overhead is closed out by allocating it to the inventory accounts as well as to Cost of Goods Sold.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Which of the following is correct with respect to closing out
overapplied manufacturing overhead to Cost of Goods Sold
versus closing it out to Work-in-Process Inventory, Finished
Goods Inventory, and Cost of Goods Sold?
O a. Cost of Goods Sold will be lower if the overapplied
overhead is closed out by allocating it to the inventory
accounts as well as to Cost of Goods Sold.
O b. The balance in the Work-in-Process account after
allocation will be higher if the overapplied overheadlis
closed out by allocating it to all appropriate accounts.
O c. None of given answer is correct.
d. The balance in the Work-in-Process account after
allocation will be the same under either method.
e. Operating income will be higher if all of the
overapplied overhead is closed out to Cost of Goods
Sold.
DELL
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