Question

At Star Plastics, the balance in manufacturing overhead (which represents over- or under- applied overhead) is always closed to Cost of Goods Sold. This is done even when the balance is relatively large. Suzette Barger, the controller, explains that this makes sense because Star uses a just-in-time (JIT) manufacturing system and jobs are shipped to customers within hours of being completed.

Required
Write a paragraph elaborating on the justification provided by Suzette Barger. Why is there no need to apportion the balance in manufacturing overhead among work in process, finished goods, and cost of goods sold?



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  • CreatedSeptember 12, 2013
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