Construction
Closing Under-Applied Overhead
Adjusting at year-end when actual overhead exceeded the amount absorbed into project costs.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cost of Sales (Overhead Shortfall) | Expense (+) | 5,000.00 | - |
| Manufacturing / Project Overhead (Control) | Expense (-) | - | 5,000.00 |
💡 Accountant's Note
Under-applied overhead means projects were under-costed. The shortfall is charged to Cost of Sales so that the full overhead burden is reflected in the period's results.
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