In a job order cost accounting system, any immaterial underapplied overhead at the end of the period can be charged entirely to Cost of Goods Sold.

Question

Quizplus · Accepted Answer

This is true. Any underapplied overhead at the end of the period must be recorded as an expense, and the most appropriate account for this would be Cost of Goods Sold. If the underapplied overhead is immaterial, it can be charged entirely to Cost of Goods Sold without distorting the accuracy of the financial statements.

In a Job Order Cost Accounting System, Any Immaterial Underapplied