The difference between actual and applied overhead will eventually be expensed, regardless of whether it is written off immediately or prorated.

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The difference between actual and applied overhead, known as underapplied or overapplied overhead, must be reconciled at the end of the accounting period. This adjustment ensures that the cost of goods sold and inventory accounts reflect the actual costs incurred, affecting the company's financial statements and ensuring accurate reporting of expenses.

The Difference Between Actual and Applied Overhead Will Eventually Be