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7 September, 21:30

Sanders Inc. has applied $567,988 of overhead to jobs. Actual overhead at the end of the year is $575,000. The adjustment for over - or underapplied overhead is a.$7,012 overapplied, decrease Cost of Goods Sold b.$7,012 underapplied, decrease Cost of Goods Sold c.$7,012 underapplied, increase Cost of Goods Sold d.$7,012 overapplied, increase Cost of Goods Sold

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  1. 8 September, 01:27
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    Option (c) is correct.

    Explanation:

    Given that,

    Applied overhead to jobs = $567,988

    Actual overhead at the end of the year = $575,000

    Hence,

    Underapplied overhead:

    = Actual overhead at the end of the year - Applied overhead to jobs

    = $575,000 - $567,988

    = $7,012

    Therefore, the adjustment for underapplied overhead is a $7,012 underapplied which increases the Cost of Goods Sold.
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