Rounding is often necessary to make the Production Report cumulative cost total agree to the total costs accounted for. In the following periods, the amount of the adjustment is either added to or subtracted from the in work in process.

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Rounding adjustments are made to the manufacturing overhead account to ensure that the Production Report's cumulative cost total matches the total costs incurred. The amount of the adjustment is either added to or subtracted from the in work in process for manufacturing overhead. Adjustments are not made to direct materials or direct labor, and a credit entry is not a type of account that can be adjusted in this way.

Rounding Is Often Necessary to Make the Production Report Cumulative