When the amount of underapplied or overapplied overhead is small, it usually is written off to
A) Work in Process Inventory.
B) Cost of Goods Sold.
C) Finished Goods Inventory.
D) selling expenses.

Question

Quizplus · Accepted Answer

The amount of underapplied or overapplied overhead is a result of the difference between actual overhead costs and applied overhead costs. When this difference is small, it is not material enough to warrant adjustment to the Work in Process or Finished Goods inventories. Instead, it is expensed to Cost of Goods Sold in the period in which it occurred.

When the Amount of Underapplied or Overapplied Overhead Is Small