Question: Any amount in the over / underapplied overhead account needs to be cleared out at the end of the accounting period with an adjusting entry.
Any amount in the overunderapplied overhead account needs to be cleared out at the end of the accounting period with an adjusting entry. The best adjusting method to do this depends on the amount of the overunderapplied overhead and the purpose of the adjustment. If the purpose is to provide an accurate method of actual individual job costs in support of profitability analysis, cost management, and bidding on future jobs, then the best method is to
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