Final answer:
When manufacturing overhead costs applied are greater than the actual costs incurred, it is referred to as overapplied overhead. This typically results from an overestimation or unexpected efficiency. Companies adjust for this variance at the end of the accounting period.
Step-by-step explanation:
If the manufacturing overhead costs applied to jobs worked on were greater than the actual manufacturing overhead costs incurred during a period, overhead is said to be overapplied. This means that the company has allocated more overhead to products or jobs than what was actually incurred. This situation can result from an overestimation of the overhead costs or a more efficient use of resources than planned. Companies typically adjust for overapplied overhead at the end of the accounting period, which might involve a credit to the cost of goods sold or adding the overapplied amount to a different account, often a variance account.