Wood Co. Ltd has total budgeted overhead of $40,000 at 10,000 machine hours. During the most recent period, 10,500 machine hours were used in the manufacture of all jobs. The actual cost totaled $40,500. The Company uses a normal job cost system with any over or under-allocated overhead closed to COGS at the end of the period. The amount closed to COGS and the direction of the change (i.e., debit or credit) would be:

a) Debit of $500

b) Credit of $500

c) Debit of $1,500

d) Credit of $1,500

( Would you be able to provide working out please? Thank you! )