Underallocated indirect costs

Underallocated indirect costs is allocated amount of indirect costs in an accounting period is less than the actual (incurred) amount in that period. Also called underapplied indirect costs or underabsorbed indirect costs.

Definitions

According to Cost Accounting by Horngren, Datar, Rajan (14th edition),

Underallocated indirect costs. Allocated amount of indirect costs in an accounting period is less than the actual (incurred) amount in that period. Also called underapplied indirect costs or underabsorbed indirect costs.