At the Current Year-End, Hardly Company Found That Its Overhead

question 133

Multiple Choice

At the current year-end, Hardly Company found that its overhead was underapplied by $2,500, and this amount was not deemed to be a material amount. Based on this information, Hardly should

• A) Close the $2,500 to Cost of Goods Sold.
• B) Close the $2,500 to Finished Goods Inventory.
• C) Do nothing about the $2,500, since it is not material, and it is likely that overhead will be overapplied by the same amount next year.
• D) Carry the $2,500 to the income statement as "Other Expense".
• E) Carry the $2,500 to the next period.