Underallocated manufacturing overhead
Underallocated manufacturing overhead is the amount of manufacturing overhead allocated to jobs is less than the amount of manufacturing overhead costs actually incurred; this results in jobs being undercosted.
Definitions
According to Managerial Accounting by Braun, Tietz (5th edition),
- Underallocated manufacturing overhead. The amount of manufacturing overhead allocated to jobs is less than the amount of manufacturing overhead costs actually incurred; this results in jobs being undercosted.