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Under- or Overapplied overhead

Underapplied overhead means that the overhead assigned to work in process is less than the overhead incurred. When manufacturing overhead has a debit balance, applied, overhead is said to be under underapplied.  Conversely, when manufacturing overhead has a credit balance, overhead is overapplied. Overapplied overhead means that the overhead assigned to work in process is greater than the overhead incurred.

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