If the allocated overhead using a predetermined overhead rate is less than the actual overhead costs, the difference is:
A) expensed to the statement of comprehensive income.
B) recognised as income in the statement of comprehensive income.
C) recognised as part of inventory on the balance sheet.
D) expensed to the cost of goods sold.

Question

Quizplus · Accepted Answer

When the allocated overhead using a predetermined overhead rate is less than the actual overhead costs, the difference is expensed to the statement of comprehensive income. This adjustment ensures that the financial statements accurately reflect the company's costs and expenses.

If the Allocated Overhead Using a Predetermined Overhead Rate Is