#7

A company incurred overhead costs of $8,400 during the year and applied overhead to jobs at the rate of $2 per machine hour. This rate is determined based on estimated overhead of $9,000 and estimated total machine hours of 4500. The company used 4,000 machine hours during the month.

What is the correct entry to adjust for an immaterial amount of underapplied or overapplied overhead?

Increase cost of goods sold by $400

Decrease cost of goods sold by $400

Increase cost of goods sold by$600

Decrease cost of goods sold by$600

Increase cost of goods sold by $1,000

Decrease cost of goods sold by $1,000