Question

If Manufacturing Overhead has a debit balance at the end of the period, then

A. overhead has been underapplied.
B. the overhead assigned to Work in Process Inventory is more than the overhead incurred.
C. overhead has been overapplied.
D. management must take corrective action.

Answer 1

If Manufacturing Overhead has a debit balance at the end of the period, it means that overhead has been overapplied.

Step-by-step explanation:

If Manufacturing Overhead has a debit balance at the end of the period, it means that overhead has been overapplied.

Overapplied overhead occurs when the amount of overhead allocated to production is greater than the actual overhead incurred. This can happen when estimations are used to assign overhead costs and the actual costs turn out to be lower.

It is important for management to identify and address this issue in order to accurately assess the cost of production and make informed decisions.