Sanders Inc. has applied $567,988 of overhead to jobs. Actual overhead at the end of the year is $575,000. The adjustment for over- or underapplied overhead is

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Quizplus · Accepted Answer

Since the actual overhead ($575,000) is higher than the applied overhead ($567,988), the difference of $7,012 is underapplied. Underapplied overhead means that not enough overhead was allocated to the jobs, so to adjust, the Cost of Goods Sold needs to be increased.