If applied overhead exceeds actual overhead,cost of goods sold must be increased by the amount of the overapplied overhead in a job order costing system.

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When applied overhead exceeds actual overhead, it indicates overapplied overhead. In this case, the cost of goods sold is typically decreased (not increased) by the amount of the overapplied overhead to adjust the accounts, reflecting that less overhead was actually incurred than was initially applied to the products.

If Applied Overhead Exceeds Actual Overhead,cost of Goods Sold Must