APPLIED Overhead is computed using the predetermined overhead rate and is the amount of costs applied (or estimated) to be allocated (needed) for specific jobs.
ACTUAL Overhead is found after the manufacturing process is complete which gives the actual amount of used/consumed resources (or total costs) that it needed to complete the job.
The two amounts can then be compared afterward which is known as Under- or Overapplied Manufacturing Overhead. When Manufacturing Overhead has a DEBIT balance, overhead is said to be UNDERAPPLIED, meaning that the overhead applied to work in process or to the certain job is LESS than the overhead incurred.
On the contrary, when manufacturing overhead has a CREDIT balance, overhead is OVERAPPLIED, meaning that the overhead assigned to work in process or to the certain job is GREATER than the overhead incurred.