Under the immediate write-off method of disposing of underapplied or overapplied overhead costs,current net income is ________ by underapplied overhead costs and current net income is ________ by overapplied overhead costs.
A) increased, decreased
B) decreased, increased
C) not affected, not affected
D) none of the above

Question

Quizplus · Accepted Answer

Under the immediate write-off method, underapplied overhead costs decrease current net income because they represent additional costs that were not anticipated. Conversely, overapplied overhead costs increase current net income because they represent costs that were anticipated but not actually incurred.

Under the Immediate Write-Off Method of Disposing of Underapplied or Overapplied