Answer:
A credit balance in the Factory Overhead account means that the overhead costs are Over applied.
Explanation:
A credit balance in the Factory Overhead account means that the overhead costs are Over applied. Over applied overhead means that the actual overhead costs are lesser than the cost applied to the production.
The over or under applied overhead is calculated as follows
Actual Factory Overhead xxx
Applied / Absorbed Factory Overhead (xxx)
Over or Under Applied overhead xxx
Over applied means the actual overhead cost is lesser than the cost applied to the production
Under applied means the actual overhead cost is greater than the cost applied to the production
