If over- under-applied overhead amount is small, it is justifiable to write it off to cost of goods sold.

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If the over- or under-applied overhead amount is small (e.g. less than 1% of total overhead), it is generally acceptable to write it off to cost of goods sold as a small error or rounding difference. However, if the amount is significant, it should be allocated to proper accounts and adjusted accordingly.

If Over- Under-Applied Overhead Amount Is Small, It Is Justifiable