The amount of overallocation or underallocation should be reflected as an adjustment to cost of goods sold under what circumstances?

Question

Quizplus · Accepted Answer

If most of the inventory produced during the period has been sold, it is practical to adjust the cost of goods sold for the amount of overallocation or underallocation. This is because the majority of the costs have already been expensed through the cost of goods sold, making this method a straightforward way to correct any allocation discrepancies.

The Amount of Overallocation or Underallocation Should Be Reflected as an Adjustment