at the current year - end, ruiz company found that its overhead was underapplied by $2,500, and this amount…

at the current year - end, ruiz company found that its overhead was underapplied by $2,500, and this amount was not considered material. based on this information, ruiz should: multiple choice close the $2,500 to cost of goods sold close the $2,500 to finished goods inventory do nothing about the $2,500, since it is not material, and it is likely that overhead will be overapplied by the same amount next year. carry the $2,500 to the income statement as “other expense.” carry the $2,500 to the next period.

at the current year - end, ruiz company found that its overhead was underapplied by $2,500, and this amount was not considered material. based on this information, ruiz should: multiple choice close the $2,500 to cost of goods sold close the $2,500 to finished goods inventory do nothing about the $2,500, since it is not material, and it is likely that overhead will be overapplied by the same amount next year. carry the $2,500 to the income statement as “other expense.” carry the $2,500 to the next period.

Answer

Brief Explanations:

Under - applied overhead represents the amount by which actual overhead costs exceed the overhead costs applied to production. At year - end, under - applied overhead is typically closed to Cost of Goods Sold to adjust the cost of goods sold amount to reflect the actual overhead costs incurred. This is a common accounting practice in cost accounting to properly match costs with revenues.

Answer:

close the $2,500 to Cost of Goods Sold