Finally prepare the entry for the underallocated or overallocated conversion costs.

The inventory account is confined solely to direct$$ materials, whether these materials are in a$$ storeroom, in work in$$ process, or in finished goods. No conversion costs are inventoried. They are allocated to the units sold at standard costs. Any$$ under$-$ or overallocated conversion costs are written off monthly to Cost of Goods Sold.