Underapplied overhead resulting from unanticipated and immaterial price increases for overhead items should be written off by

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Quizplus · Accepted Answer

Underapplied overhead is a debit balance that occurs when actual overhead is greater than applied overhead. It is written off as an expense through the cost of goods sold account. Since the price increases are immaterial, they do not impact work in process inventory or finished goods inventory. Therefore, the only account that needs to be debited is cost of goods sold, which will increase the expense and decrease net income. Choice B is the most appropriate as it increases cost of goods sold to write off the underapplied overhead.

Underapplied Overhead Resulting from Unanticipated and Immaterial Price Increases for Overhead