Overapplied Overhead

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Overapplied Overhead

In accounting, a record of the overhead for a work-in-process product that is greater than the overhead actually is. This may happen for any number of reasons. Because overapplied overhead means profits are higher than the records say they should be, it is added to a company's profit at the end of the accounting period. It is also called overabsorbed overhead. See also: Underapplied overhead.
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So the entire hourly rate for those four presses (minus electricity) generates over-absorbed overhead, which falls directly to profit.