The amount of overallocation or underallocation is found by taking the difference between the amount of overhead allocated during the year and the amount of overhead incurred during the year.

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This statement is true. The amount of overallocation or underallocation is calculated by comparing the amount of overhead allocated (through the predetermined overhead rate) to the actual amount of overhead (costs incurred) during the year. The difference between these two amounts reflects overallocation or underallocation of overhead.

The Amount of Overallocation or Underallocation Is Found by Taking