ince predetermined overhead is

supposed to average out fluctuations

during a year, it is logical that when actual

overhead turns out to be less than

estimated $($i$.$e$.,$ overhead is overapplied$),$

this amount should not all be charged to

income this period since inventory will be

over$-$valued on the balance sheet Those

actual costs, if allocated to WIP and

Finished Goods inventory, will then be

charged against income with the related

goods are sold which better satisfies the

matching principle