If there is a debit balance at the end of the period in the manufacturing overhead account, then it means that manufacturing overhead is overapplied.

Question

BlackTom AI · Accepted Answer

A debit balance in Manufacturing Overhead indicates that actual manufacturing overhead costs exceeded the overhead applied to production (i.e., underapplied overhead), not overapplied.

1. Relevant knowledge points and concepts
- Manufacturing Overhead is a temporary account used to collect actual indirect manufacturing costs.
- Overhead is applied to Work-in-Process (WIP) using a predetermined overhead rate; the applied amount is a credit to Manufacturing Overhead and a debit to WIP.
- If actual overhead > applied overhead, Manufacturing Overhead shows a debit (underapplied). If applied > actual, it shows a credit (overapplied).

2. Step-by-step reasoning
- Start with the two streams: actual overhead costs posted as debits to Manufacturing Overhead; applied overhead posted as credits when charged to WIP.
- The ending balance equals Actual overhead debits minus Applied overhead credits.
- If this balance is debit (positive on the debit side), Actual > Applied. That shortfall means not enough overhead was applied — underapplied.
- If balance is credit, Applied > Actual, meaning too much overhead was allocated — overapplied.

3. Intermediate steps / example calculation
- Example: Actual overhead incurred = $120,000 (debit to MOH). Applied overhead using rate = $100,000 (credit to MOH).
- MOH ending balance = $120,000 (debit) − $100,000 (credit) = $20,000 debit → underapplied $20,000.
- Conversely, if Applied = $130,000 and Actual = $120,000: MOH balance = $120,000 − $130,000 = $10,000 credit → overapplied $10,000.

4. Why the correct answer is correct
- The definition and accounting flow show debit balance = underapplied. The statement claiming a debit means overapplied contradicts that definition, so it is false.

5. Why the other option (True) is incorrect
- Saying a debit balance indicates overapplied reverses the sign convention: overapplied produces a credit balance, not a debit.

6. Conclusion
- Therefore the correct response is False, which matches the provided answer.

If there is a debit balance at the end of the period in the manufacturing overhead account, then it means that manufacturing overhead is overapplied.判断题

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