Question

he journal entry for adjustment of overallocated manufacturing overhead includes a​ ________. A. credit to Manufacturing Overhead B. debit to WorkminusinminusProcess Inventory C. credit to Cost of Goods Sold D. credit to Finished Goods Inventory

Answer 1

Answer:

C. Credit to Cost Of Goods Sold

Explanation:

Over allocation refers to the scenario of assigning more than actual manufacturing overhead costs. This means profits would be understated in such a scenario and costs overstated.

The journal entry for adjustment of overallocated manufacturing overheads is:

Manufacturing Overheads A/C                           Dr.

      To Cost Of Goods Sold A/C

(Being rectification entry for over allocated manufacturing overheads recorded)

Cost of Goods Sold is an expense and expenses are debited. A credit to such an account reduces it's balance as in the case above.