32 2.55 Monsters Inc. uses normal costing and assigns manufacturing overhead costs to production on the basis of machine hours. At the beginning of the year, the company expected to use 11,500 machine hours during the year. At the end of the year, actual machine hours for the year were 9,700 hours, actual manufacturing overhead costs for the year were $143,350, and manufacturing overhead for the year was under-applied by $18,220. The estimated manufacturing overhead at the beginning of the year Monsters Inc. must have used in its predetermined overhead rate was: O $164,023 $125,130 $148,350 O $138,350 None of the above 31 2.5$ When closing over-applied manufacturing overhead to Cost of Goods Sold, which of the following statements is true? O Cost of goods sold will increase Operating income will decrease O Gross margin will decrease O Gross margin will increase None of the above statements are true (i.e., all of the above statements are false) 2.54