In the immediate write-off of overhead variances,underapplied overhead is regarded as a(n)________.
A) addition to the cost of inventory
B) deduction from the cost of inventory
C) decrease in cost of goods sold
D) increase in cost of goods sold

Question

Quizplus · Accepted Answer

Underapplied overhead means that the actual manufacturing overhead costs were higher than the overhead costs allocated to products. Therefore, it is treated as an increase in the cost of goods sold to adjust for the underapplied amount.

In the Immediate Write-Off of Overhead Variances,underapplied Overhead Is Regarded