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At the end of the year, overhead applied was $3,737,000. Actual overhead was $3,430,000. Closing over/underapplied...

At the end of the year, overhead applied was $3,737,000. Actual overhead was $3,430,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to

a.increase by $614,000

b.decrease by $614,000

c.increase by $307,000

d.decrease by $307,000

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Expert Solution

answer: increase by $307000

budgeted overhead=$3737000

actual overhead=$3430000

overapplied overhead=$3737000-$3430000=$307000

Overapplied overhead occurs when expenses incurred are actually less than what a company accounts for in its budget.overapplied overhead must be removed retroactively from Cost of Goods Sold to eliminate this discrepancy. Since Cost of Goods Sold is decreased, overapplied overhead increases net income.

ekkarill92 answered 2 years ago
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