Question

matthias corporation has provided data concerning the corporations manufacturing overhead account for the month of may. prior to the closing of the overapplied or underapplied balance to cost of goods sold, the total of the debits to the manufacturing overhead account was \\$53,000 and the total of the credits to the account was \\$69,000. which of the following statements is true?

multiple choice

manufacturing overhead applied to work in process for the month was \\$69,000

manufacturing overhead transferred from finished goods to cost of goods sold during the month was \\$53,000

actual manufacturing overhead incurred during the month was \\$69,000

manufacturing overhead for the month was underapplied by \\$16,000

Explanation:

Analyze the Manufacturing Overhead T-Account

The Manufacturing Overhead account records actual overhead costs as debits and applied overhead costs as credits:

$$ \text{Debits (Actual Manufacturing Overhead)} = \$53,000 $$

$$ \text{Credits (Applied Manufacturing Overhead)} = \$69,000 $$

Evaluate the given statements

• Statement 1: "Manufacturing overhead applied to Work in Process for the month was \$69,000."

Since applied overhead is recorded as credits to the Manufacturing Overhead account, the applied overhead is indeed \$69,000. This statement is true.

• Statement 2: "Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was \$53,000."

This is incorrect; the debit balance of \$53,000 represents actual overhead incurred, not a transfer from Finished Goods.

• Statement 3: "Actual manufacturing overhead incurred during the month was \$69,000."

This is incorrect; actual overhead is represented by the debits, which total \$53,000.

• Statement 4: "Manufacturing overhead for the month was underapplied by \$16,000."

Since applied overhead (\$69,000) exceeds actual overhead (\$53,000), overhead was overapplied by:

$$ \$69,000 - \$53,000 = \$16,000 $$

Thus, it was overapplied, not underapplied.

Determine the correct option

The only true statement is that the manufacturing overhead applied to Work in Process for the month was \$69,000.

Answer:

• (A) Manufacturing overhead applied to Work in Process for the month was $69,000 (Correct answer)
• (B) Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $53,000
• (C) Actual manufacturing overhead incurred during the month was $69,000
• (D) Manufacturing overhead for the month was underapplied by $16,000