At the current year-end, Hardly Company found that its overhead was underapplied

Question

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.

Explanation / Answer

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.

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