Asked by ornela xhina on Apr 28, 2024
Verified
Refer to the T-account below: 
The ending balance of $8,000 represents which of the following?
A) Underapplied overhead.
B) Manufacturing overhead that will be carried over to the next period.
C) Overapplied overhead.
D) A bookkeeping error.
Underapplied Overhead
Occurs when the allocated manufacturing overhead cost is less than the actual overhead incurred, leading to under-recovered expenses.
Manufacturing Overhead
This includes all the indirect costs associated with manufacturing a product, such as utilities, indirect labor, and maintenance of equipment.
- Understand the impact of overapplied or underapplied manufacturing overhead on financial statements.
Verified Answer
AL
Arhenis LopezMay 02, 2024
Final Answer :
C
Explanation :
The T-account shows that the total debits ($60,000) exceeded the total credits ($52,000) by $8,000. This indicates an overapplied overhead, which occurs when more overhead costs are allocated than were actually incurred. Therefore, the ending balance of $8,000 represents overapplied overhead.
Learning Objectives
- Understand the impact of overapplied or underapplied manufacturing overhead on financial statements.
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