Overapplied manufacturing overhead exists when:
A)there is a debit balance in the manufacturing overhead account at the end of the period
B)actual manufacturing overhead is less than applied manufacturing overhead
C)the products manufactured during a period are undercosted
D)applied overhead is larger that direct labor

Question

Quizplus · Accepted Answer

Overapplied manufacturing overhead occurs when the amount of manufacturing overhead applied to work in process is greater than the actual manufacturing overhead incurred. This would result in a credit balance in the manufacturing overhead account at the end of the period. Option A is incorrect because a debit balance in the manufacturing overhead account would indicate underapplied overhead. Option C is incorrect because undercosting of products is not directly related to overapplied overhead. Option D is incorrect because the relationship between applied overhead and direct labor is not relevant to determining overapplied overhead.

Overapplied Manufacturing Overhead Exists When