If actual overhead is greater than applied manufacturing overhead then manufacturing overhead is:
A) underapplied.
B) overapplied.
C) a loss on the income statement under "Other Expenses and Losses."
D) considered a miscellaneous expense.

Question

Quizplus · Accepted Answer

When actual overhead is greater than applied manufacturing overhead, it means that the amount of overhead allocated to products during the period was less than the actual amount of overhead incurred. This situation is referred to as underapplied manufacturing overhead.

If Actual Overhead Is Greater Than Applied Manufacturing Overhead Then