Two of the reasons why manufacturing overhead may be underapplied are: (1) the estimated total manufacturing overhead cost may have been too high; and (2) the estimated total amount of the allocation base may have been too low.

Question

Quizplus · Accepted Answer

Underapplied manufacturing overhead occurs when the actual overhead costs are higher than the estimated overhead costs or when the actual amount of the allocation base is higher than estimated, not lower.

Two of the Reasons Why Manufacturing Overhead May Be Underapplied