If the balance of over or under applied for the period is immaterial, it should be:
A) pro-rated over cost of sales, and finished goods
B) assigned to cost of sales
C) carried forward to become the opening balance in the next accounting period
D) pro-rated over cost of sales, work in process and finished goods

Question

Quizplus · Accepted Answer

When the balance of over or under applied overhead for the period is immaterial, it is typically assigned to cost of sales to simplify the accounting process and avoid the complexity of prorating it over multiple accounts. This approach allows for a straightforward adjustment to the income statement without significantly distorting the cost of goods sold or inventory values.

If the Balance of Over or Under Applied for the Period