If a company applies overhead to production with a predetermined rate, balance in the Factory Overhead account at the end of the period means that 1. The bookkeeper has made an error because the debits don't equal the credits. 2. The balance will be carried forward to the next period as an overhead cost. 3. Actual overhead was less than the overhead amount charged to production. 4. The overhead was underapplied for the period 5. Actual overhead was greater man me overhead amount charged to production.

ACTUAL OVERHEAD INCURRED WAS LESS THAN THE OVERHEAD AMOUNT CHARGED TO PRODUCTION.

Explanation:

Actual overhead are the manufacturing costs other than direct materials and direct labour.

Applied overhead is the amount of the manufacturing overhead that is assigned to the goods produced.

The over or under-applied manufacturing overhead is defined as the difference between manufacturing overhead cost applied to work in process and manufacturing overhead cost actually incurred during a period.

If the factory overhead cost applied to work in process is more than the factory overhead cost actually incurred during a period, then it is said to be over-applied manufacturing overhead.

If the factory overhead cost applied to work in process is less than the factory overhead cost actually incurred during a period, then it is under-applied manufacturing overhead.

At the end of the period, if the manufacturing overhead account shows a debit balance, it means the overhead is under-applied but if it shows a credit balance, it means the overhead is over-applied.

Therefore, the answer that best suits the question is: ACTUAL OVERHEAD INCURRED WAS LESS THAN THE OVERHEAD AMOUNT CHARGED TO PRODUCTION.

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