Why should the Overhead account€™s under-applied or over-applied overhead be transferred to the Cost of Goods Sold account?

Rhile Industries, Inc., produces colorful and stylish nursing un

Rhile Industries, Inc., produces colorful and stylish nursing uniforms. During September, Rhile Industries completed the following transactions:
Sept.1Purchased direct materials on account, $59,400.
3Requested direct materials costing $26,850 for production (all for Job A).
4Purchased indirect materials costing, $22,830.
8Issued checks for the following overhead costs: utilities, $4,310; manufacturing insurance, $1,925; and repairs, $4,640.
10Requested direct materials costing $29,510 (all used on Job A) and indirect materials costing $6,480 for production.
15Recorded the following gross wages and salaries for employees: direct labor, $62,900 (all for Job A); indirect labor, $31,610; manufacturing supervision, $26,900; and sales commissions, $32,980.
15Applied overhead to production at a rate of 120 percent of direct labor cost.
Sept22Paid the following overhead costs: utilities, $4,270; maintenance, $3,380; and rent, $3,250.
23Recorded the purchase on account and receipt of $31,940 of direct materials and $9,260 of indirect materials.
27Requested $28,870 of direct materials (Job A, $2,660; Job B, $8,400; Job C, $17,810) and $7,640 of indirect materials for production.
30Recorded the following gross wages and salaries for employees: direct labor, $64,220 (Job A, $44,000; Job B, $9,000; Job C, $11,220); indirect labor, $30,290; manufacturing supervision, $28,520; and sales commissions, $36,200.
30Applied overhead to production at a rate of 120 percent of direct labor cost.
30completed and transferred Job A (58,840 units) and Job B (3,525 units) to finished goods inventory; total cost was $322,400.
30Shipped Job A to the customer; total production cost was $294,200, and sales price was $418,240.
30Recorded the following adjusting entries: $2,680 for depreciation-manufacturing equipment; and $ 1,230 for property taxes, manufacturing, payable at month end.

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