Question

Mountain Man Corporation debited Cost of Goods Sold and credited Manufacturing Overhead at year-end. On the basis of this information, one can conclude that

Answer 1

Answer:

Actual overhead was less than applied overhead.

Explanation:

In the case when the cost of goods sold is debited and credited the manufacturing overhead that means the actual overhead would be lesser than the applied overhead

So this represents the underapplied overhead

The following journal entry is passed

Cost of goods sold Dr XXXX

     To Manufacturing overhead XXXX

(being the underapplied overhead is recorded)

Here the cost of goods sold is debited as it increased the expense and credited the manufacturing overhead as it decreased the expense