At the end of each year,the underapplied or overapplied overhead usually is closed out to the Cost of Goods Sold account.

Question

Quizplus · Accepted Answer

This statement is true. Underapplied or overapplied overhead is a result of the difference between actual overhead costs and applied overhead costs. At the end of the year, this difference is typically closed out to the Cost of Goods Sold account as an adjustment to correctly reflect the total cost of goods sold during the year.

At the End of Each Year,the Underapplied or Overapplied Overhead