If the difference between overhead applied and actual overhead is insignificant,it is usually written off to
A)Cost of Goods Sold.
B)Work in Process Inventory.
C)Finished Goods Inventory.
D)Materials Inventory.

Question

Quizplus · Accepted Answer

If the difference between applied and actual overhead is insignificant, it suggests that the amount is small and not worth the effort to allocate it to specific inventory accounts. In such cases, the difference is charged to Cost of Goods Sold, which is an expense account that absorbs all the expenses associated with the production process. Writing off the difference to Cost of Goods Sold ensures that the income statement reflects the true cost of goods sold, and the inventory accounts are not artificially inflated or understated. Therefore, choice A is the best option.

If the Difference Between Overhead Applied and Actual Overhead Is