If the amount of underapplied overhead or overapplied overhead is small in amount, the Manufacturing Overhead account is closed to

Question

Quizplus · Accepted Answer

If the amount of underapplied overhead or overapplied overhead is small, it means that the difference between actual overhead and applied overhead is not significant enough to affect the overall cost of goods sold. Therefore, the Manufacturing Overhead account can be closed directly to Cost of Goods Sold without having to allocate it to any of the inventory accounts.

If the Amount of Underapplied Overhead or Overapplied Overhead Is