Overapplied overhead that is material in amount is allocated between Finished Goods Inventory,Work in Process,and Cost of Goods Sold at year end.

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Overapplied overhead represents the amount by which actual overhead costs are less than the overhead costs applied to production. This amount is allocated to Finished Goods Inventory, Work in Process, and Cost of Goods Sold based on the amounts of overhead applied to each account. If the amount of overapplied overhead is material, it should be allocated between these accounts at year-end.

Overapplied Overhead That Is Material in Amount Is Allocated Between