If manufacturing overhead applied exceeds the actual manufacturing overhead costs of the period,then manufacturing overhead is overapplied.

Question

Quizplus · Accepted Answer

If the manufacturing overhead applied is more than the actual manufacturing overhead costs of the period, then it means the company has overapplied the manufacturing overhead. This results in a credit balance in the manufacturing overhead account and is considered to be an unfavorable situation as it indicates that the company has allocated more overhead costs to products than they actually incurred.

If Manufacturing Overhead Applied Exceeds the Actual Manufacturing Overhead Costs