After putting all the available data in the table, the impact on the cost of goods sold will be debited for the $64,000 of underapplied overhead. Hence, Option C is correct.
The term "cost of good sold" is used to denote the amount that has been raised by a business after paying for a cost that is directly related to the sales of a product.
It is determined according to business type, which includes what kind of product has been purchased for resale, what kind of raw material has been used; and whether packaging and direct labor.
All of these are included in the production or selling of the goods.
Debit to manufacturing overhead account = 480,000 + 384,000 + 448,000
= $1,312,000
Debit to manufacturing overhead account represents actual manufacturing overhead costs.
Actual manufacturing overhead costs = $1,312,000
Credit to manufacturing overhead account = $1,248,000
Credit to the manufacturing overhead account represents applied manufacturing overhead.
Applied manufacturing overhead = $1,248,000
Underapplied manufacturing overhead = Actual manufacturing overhead costs - Applied manufacturing overhead
= 1,312,000 - 1,248,000
= $64,000
Thus, Correct option is (C) i.e. Cost of Goods Sold will be debited for the $64,000 of underapplied overhead.
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The complete question has been attached in text form:
The Manufacturing Overhead account shows debits of $480,000, $384,000, and $448,000 and one credit for $1,248,000. Based on this information, what is the impact, if any, on the Cost of Goods Sold?
A : Cost of Goods Sold will be debited for the $64,000 of overapplied overhead
B : Cost of Goods Sold will be credited for the $64,000 of underapplied overhead
C : Cost of Goods Sold will be debited for the $64,000 of underapplied overhead
D : Cost of Goods Sold will be credited for the $64,000 of overapplied overhead
