Overhead has been underapplied when the:

Question

Quizplus · Accepted Answer

DWhen overhead is underapplied, it means that the actual manufacturing overhead costs were higher than the overhead costs allocated to products. This results in a debit balance in the manufacturing overhead account, indicating that not enough overhead was applied to the cost of goods sold or inventory. The adjusting entry to correct underapplied overhead typically involves a credit to the manufacturing overhead account and a debit to cost of goods sold or inventory, reflecting the additional costs that were not initially applied.

Overhead Has Been Underapplied When The