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Chapter 9

Q. 9.CR.10

What three methods can be used to deal with over- and under-absorbed overhead?

Step-by-Step

Verified Solution

Over- and under-absorbed overhead can be treated as (1) Cost of Goods Sold, (2) prorated among the Work-in-Process, Finished Goods, and Cost of Goods Sold accounts, or (3) eliminated by recalculating the application rate using actual numbers and reallocating the overhead.