If actual overhead incurred during a period exceeds applied overhead, the difference will be a credit balance in the Factory Overhead account at the end of the period.

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If actual overhead incurred during a period exceeds applied overhead, the difference will result in a debit balance in the Factory Overhead account at the end of the period. This is because the actual overhead costs were higher than what was applied, meaning that more expenses were incurred than what was allocated to production.

If Actual Overhead Incurred During a Period Exceeds Applied Overhead