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At the end of the year the Manufacturing Overhead account is closed into what account? (a) Work...

Question:

At the end of the year the Manufacturing Overhead account is closed into what account?

(a) Work in Process

(b) Finished Goods

(c) Cost of Goods Sold

(d) Manufacturing Overhead Control

Manufacturing Overhead Control Account:

In manufacturing companies, the Manufacturing Overhead Control account is used to record all the actual overhead costs incurred (on its debit side) and the overhead applied to production (on its credit side). The balance of the account after these transactions are processed is called the under- or overapplied manufacturing overhead and is adjusted at the end of each accounting period.

Answer and Explanation:


The balance in the Manufacturing Overhead account represents the difference between the actual overhead cost and the applied overhead costs, and this difference is adjusted against the Cost of Goods Sold expense account. The COGS account can be either debited or credited, depending on whether the overhead was under or overapplied.

The correct option is (c)



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Under- or Over-Applied Manufacturing Overhead

from Accounting 301: Applied Managerial Accounting

Chapter 5 / Lesson 9
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