If the amount of overapplied or underapplied manufacturing overhead is small,most companies will generally make an adjustment to

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Adjusting Cost of Goods Sold is the most appropriate option when the overapplied or underapplied amount is small, as it directly affects the cost of goods sold and does not significantly impact the financial statements. Adjusting Work in Process or Finished Goods Inventory will affect both the balance sheet and income statement, which may require larger adjustments and lead to more extensive financial reporting.

If the Amount of Overapplied or Underapplied Manufacturing Overhead Is