Clemmens Company Applies Overhead Based on Direct Labor Cost

Multiple Choice

Clemmens Company applies overhead based on direct labor cost.Estimated overhead and direct labor costs for the year were $112,500 and $125,000,respectively.During the year,actual overhead was $107,400 and actual direct labor cost was $120,000.The entry to close the over- or underapplied overhead at year-end,assuming an immaterial amount,would include:

A) A debit to Cost of Goods Sold for $600.
B) A credit to Factory Overhead for $600.
C) A credit to Finished Goods Inventory for $600.
D) A debit to Work in Process Inventory for $600.
E) A credit to Cost of Goods Sold for $600.