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

Question

Quizplus · Accepted Answer

Overapplied overhead means that the actual overhead costs were less than what was applied to the cost of goods sold. Therefore, it is treated as a decrease in the cost of goods sold to adjust for the overestimation.

In the Immediate Write-Off Approach to Overhead Variances,overapplied Overhead Is