What is the best theoretical method of allocating underapplied or overapplied overhead, assuming that the objective is to obtain as accurate a cost application as possible?

To understand the process of under and over applied overheads it is essential that the process for job-costing is understood. The basic flow of costs in a job-order system begins by recording the costs of material, labor, and manufacturing overhead. "The use of absorption costing to provide quotes for jobs takes account of both fixed and variable costs. (1) Material and direct labor costs are debited to the 'Work in Process' inventory. Any indirect material or …

…overapplied overhead to Cost of Goods Sold, purely because it seems to me to be the easiest to understand, Resources 1.<Tab/>Understanding Organisational Context; pp255; Capon; Prentice Hall 2000 2.<Tab/>Managerial Accounting; Horngren, Sundem & Stratton; Prentice Hall;2002 3.<Tab/>Managing Budgets; The National Tracker service of Primary Care Trust's; Gravelle, Smith, Dusheiko , Jacobs; National Primary Care Research and Development Centre and Kings Fund; 2000