How should material amounts of underapplied or overapplied overhead be disposed of?
A)treated as an adjustment to cost of goods sold
B)treated as an adjustment to work in process
C)allocated to direct materials,work in process,and finished goods
D)allocated to work in process,finished goods,and cost of goods sold

Question

Quizplus · Accepted Answer

Underapplied or overapplied overhead should be allocated to Work in process, Finished goods, and Cost of goods sold. This is because overhead costs are incurred in all stages (direct materials, work in process, and finished goods) of the manufacturing process, and thus, the under or over-applied overhead should be allocated to all of these stages. This allocation will ensure that the costs are appropriately recorded and reflected in the cost of goods sold.

How Should Material Amounts of Underapplied or Overapplied Overhead Be