Under- or overapplied manufacturing overhead at year-end is most commonly:
A) charged or credited to Work-in-Process Inventory.
B) charged or credited to Cost of Goods Sold.
C) charged or credited to a special loss account.
D) prorated among Work-in-Process Inventory, Finished-Goods Inventory, and Cost of Goods Sold.
E) ignored because there is no effect on the Cash account.

Question

Quizplus · Accepted Answer

Under- or overapplied manufacturing overhead at year-end is most commonly charged or credited to Cost of Goods Sold. This approach simplifies the adjustment process by directly affecting the income statement without altering the balances of the inventory accounts.

Under- or Overapplied Manufacturing Overhead at Year-End Is Most Commonly