At the end of the year a company has a $1,200 debit balance in Manufacturing Overhead. If this amount is considered immaterial, the company will a) make an adjusting entry by debiting Manufacturing Overhead Applied for SI,200 and crediting Manufacturing Overhead for $1,200. b) make an adjusting entry by debiting Cost of Goods Sold for $1,200 and crediting Manufacturing Overhead for $1,200. c) make no adjusting entry because differences between actual overhead and the amount applied are a normal part of job costing and will average out next year. d) make an adjusting entry by debiting Manufacturing Overhead Expense for $1,200 and crediting Manufacturing Overhead for $1,200.

The ordinary treatment for the debit balance in the Manufacturing Overhead is to regard it as an under-absorbed cost, then the $1,200 will be debited to the Cost of Goods Sold while crediting the Manufacturing Overhead for $1,200. Differences between actual overhead and the amount applied are not a normal part of job costing but process costing. By debiting the Cost of Goods Sold, the manufacturing overhead would have been accounted for in determining the actual cost of the goods sold.