: Which of the following is correct with respect to closing out underapplied manufacturing overhead to Cost of Goods Sold versus closing it out to
: Which of the following is correct with respect to closing out
underapplied manufacturing overhead to Cost of Goods Sold
versus closing it out to Work-in-Process Inventory, Finished Goods
Inventory, and Cost of Goods Sold?
Select one:
O a. The balance in the Work-in-Process account after allocation
will be higher if the underapplied overhead is closed out by
allocating it to all appropriate accounts.
O b. Cost of Goods Sold will be higher if the underapplied
overhead is closed out by allocating it to the inventory accounts
as well as to Cost of Goods Sold.
Oc. None of given ANSWER is correct.
O d. Operating income will be higher if all of the underapplied
overhead is closed out to Cost of Goods Sold.
O e. The balance in the Work-in-Process account after allocation
will be the same under either method.
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