If actual overhead is less 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 less than applied manufacturing overhead, it means that the company has applied more overhead to the products than was actually incurred. This situation is referred to as overapplied manufacturing overhead.

If Actual Overhead Is Less Than Applied Manufacturing Overhead Then