If actual manufacturing overhead costs are less than the applied manufacturing overhead, then manufacturing overhead is:

Under applied

Explanation:

Actual manufacturing overhead costs are those amounts of overhead costs that are incurred by a firm during production processes.

Applied manufacturing overhead costs are those costs that are added to jobs as they near completion. Usually, as work or job nears completion during the year, the predetermined overhead rate and actual activity level are used to apportion them.

In general, manufacturing overhead costs are those costs that are not direct labor costs or direct material costs; which is made of expenses like equipment and lightening. It could either be under or over applied. It is under applied as in the above while it is over applied when the actual manufacturing overhead costs are more than the applied manufacturing overhead costs.

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