Sagon Corporation has provided data concerning the Corporation's Manufacturing Overhead account for the month of September. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $76,000 and the total of the credits to the account was $66,000. Which of the following statements is true?

A) Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $76,000.
B) Actual manufacturing overhead incurred during the month was $66,000.
C) Manufacturing overhead applied to Work in Process for the month was $76,000.
D) Manufacturing overhead for the month was underapplied by $10,000.

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Saurabh Kambi · Accepted Answer

Final Answer : D, Explanation :  The total debits ($76,000) represent the applied manufacturing overhead, while the total credits ($66,000) represent the actual manufacturing overhead incurred. Therefore, there is an overapplied balance of $10,000 ($76,000 - $66,000), which will be closed to Cost of Goods Sold.

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