Sanders Inc. has applied $567,988 of overhead to jobs in the cost ledger. Actual overhead at the end of the year is $575,000. The adjustment for over or underapplied overhead isa.$7,012 underapplied, decrease Cost of Goods Soldb.$7,012 overapplied, decrease Cost of Goods Soldc.$7,012 underapplied, increase Cost of Goods Soldd.$7,012 overapplied, increase Cost of Goods Sold

option (c) $7,012 underapplied, increase Cost of Goods

Explanation:

Data provided in the problem:

Applied overhead to the job = $ 567,988

Actual overhead at the end of the year = $ 575,000

Since the actual overhead at the end of the year is more than the overhead applied.

thus, the overhead is underapplied i. e less than the required.

Now, the amount of underapplied overhead is calculated as

= actual overhead - applied overhead

or

= $ 575,000 - $ 567,988 = $ 7012

also, the underapplied overhead will lead to the increase in the cost of the goods.

Hence,

the correct answer is option (c) $7,012 underapplied, increase Cost of Goods