how does a firm dispose of over-or underapplied overhead costs?

Question

explain

Answer 1

over applied can go back to profits, underapplied need to take from profits.

Answer 2

Overhead variances can be spending, efficiency, budget or volume variances and how you dispose of them depends on whether they're over- or under-applied. You may need to allocate them to inventories (WIP & finished goods) or take them to the income statement. Pls click on the link to learn what to do in each instance.