Interim financial statements for a manufacturing business would report overapplied factory overhead as a deferred item on the balance sheet.

Question

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Overapplied factory overhead is a result of applying more overhead to production than was actually incurred, resulting in a credit balance in the factory overhead account. This credit balance is reported as a deferred item on the balance sheet until it can be allocated to future periods or adjusted in the current period.

Interim Financial Statements for a Manufacturing Business Would Report Overapplied