When closing overapplied manufacturing overhead to cost of goods sold, which of the following would be true?
a. Work in process will decrease.
b. Cost of goods sold will increase.
c. Net income will decrease.
Selected: d. Gross margin will increase. This answer is correct.
Correct! To close overapplied overhead, debit Manufacturing Overhead and credit Cost of Goods sold which lowers cost and thereby increases the gross margin.