In a job order costing system, any immaterial underapplied overhead at the end of the period can be charged entirely to Cost of Goods Sold.

Question

Quizplus · Accepted Answer

This is true. When there is underapplied overhead at the end of the period, it means that actual overhead costs were greater than the overhead applied to the jobs. This difference can be charged to Cost of Goods Sold as an expense because it is not material enough to warrant adjusting the costs of specific jobs.

In a Job Order Costing System, Any Immaterial Underapplied Overhead