The excess of applied overhead costs over the actual overhead costs is called ________.
A) overapplied overhead
B) underapplied overhead
C) underbudgeted overhead
D) overestimated overhead

Question

Quizplus · Accepted Answer

When applied overhead costs exceed actual overhead costs, the result is an overapplied overhead. This occurs when a company uses a predetermined overhead rate that is greater than the actual overhead costs incurred during the period. As a result, the overhead costs applied to products or services exceeds the actual overhead costs incurred, resulting in a higher cost of goods sold or a lower cost of goods manufactured.

The Excess of Applied Overhead Costs Over the Actual Overhead