Underapplied or overapplied overhead represents the difference between actual manufacturing overhead costs and applied manufacturing overhead costs.

Question

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Underapplied or overapplied overhead occurs when actual manufacturing overhead costs do not match applied manufacturing overhead costs. This difference can occur due to factors such as unexpected increases in overhead costs or inaccurate estimation of the amount of overhead to be applied to production.

Underapplied or Overapplied Overhead Represents the Difference Between Actual Manufacturing