Question

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 $79,000 and the total of the credits to the account was $58,000. Which of the following statements is true? Multiple Choice Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $79,000. Actual manufacturing overhead incurred during the month was $58,000. Manufacturing overhead applied to Work in Process for the month was $79,000. Manufacturing overhead for the month was underapplied by $21,000.

Answer 1

Manufacturing overhead for the month was under-applied by $21,000.

Step-by-step explanation:

As for the information provided, it is clear that:

Expected and budgeted overheads were $79,000 that is actual overheads incurred, but from $79,000 of overheads, the overheads actually charged in the period as cost of goods sold = $58,000

That means the overheads are under-applied by the difference in actual overheads incurred and those charged to cost of goods sold = $79,000 - $58,000 = $21,000

That is overheads are under-applied by $21,000