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Under - UNDER OR OVERAPPLIED MANUFACTURING OVERHEAD ,...

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UNDER- OR OVERAPPLIED MANUFACTURING OVERHEAD When Manufacturing Overhead has a  debit balance , overhead is said to be underapplied.  Underapplied overhead  means that the overhead assigned to work in process is less than the  overhead incurred. 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. Illustration  15-20  shows these concepts.  Illustration 15-20    Under- and overapplied overhead Year-End Balance At the end of the year, all manufacturing overhead transactions are complete. There is no further  opportunity for offsetting events to occur. At this point, Wallace eliminates any balance in  Manufacturing Overhead by an adjusting entry. It considers under- or overapplied overhead to be an 
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