What is Overapplied Overhead?

Legal Definition
1. The amount by which an overhead has been over absorbed. Added to budgeted profit in end of period accounts. 2. When the overhead applied to a work in progress is more than the work in progress will incur, it is said to be overapplied. This is reported in balance sheets as unearned revenue, and is balanced in the end of year accounts by adding a credit to the Cost of Goods Sold column.