The most common method for disposing of over or underapplied overhead is to:

Question

Quizplus · Accepted Answer

The most common method for disposing of over or underapplied overhead is to make a direct adjustment to Cost of Goods Sold. This is because Cost of Goods Sold accounts for all the costs incurred to produce the goods sold, including overhead. By adjusting Cost of Goods Sold, the over- or underapplied overhead is effectively allocated to the goods sold and the income statement is accurately reflected.

The Most Common Method for Disposing of Over or Underapplied