Question

Any adjustment for underallocated overhead is _______.

Answer 1

An adjustment for underallocated overhead is the transfer of unallocated overhead costs to a specific cost object to ensure proper allocation.

Step-by-step explanation:

any adjustment for underallocated overhead is simply transferring a portion of the overhead cost that was not allocated to a specific cost object. This adjustment is made to ensure that the total overhead cost is properly allocated and distributed among the cost objects.

For example, let's say a company has allocated $10,000 of overhead costs to Product A, but the actual overhead costs incurred were $12,000. In this case, the adjustment for underallocated overhead would be $2,000. This adjustment could be added to the cost of Product A or distributed among other cost objects to correct the underallocation.