Construction
Closing Over-Applied Overhead
Adjusting at year-end when the overhead absorbed into projects exceeds actual overhead incurred.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Manufacturing / Project Overhead (Applied) | Clearing | 10,000.00 | - |
| Manufacturing / Project Overhead (Control) | Expense (-) | - | 8,000.00 |
| Cost of Sales (Reduction) | Expense (-) | - | 2,000.00 |
💡 Accountant's Note
If projects absorbed more overhead than was actually incurred, cost of sales was overstated. The over-applied amount is credited back, reducing COGS and improving reported profit.
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