 First, let's take a look at the sequence of events related to overhead. Generally, at the start of the period, at the start of the month, we set up the predetermined overhead rate. That overhead rate, the thing that we will use to allocate the overhead from the bucket of overhead to individual jobs. Throughout the month, then we're going to record actual overhead, the actual things that we're going to put into overhead. Remember that those things are the things that we cannot apply to a specific job in a job cost system. And therefore, we put it into overhead and are going to apply it to a job using an estimate, that estimated being the predetermined overhead rate. It's going to be part of the estimate process. Then we're going to apply the estimated overhead to the jobs. Now, note that here we have these two items are happening. One, we have the recorded overhead, the actual overhead, and then we have the applied overhead. And of course, because the recorded overhead or the applied overhead is an estimate, it's not going to match the recorded overhead. So we're going to have then this problem of over or under applied overhead. And it could be either one, we might have over applied or under applied. Whatever is the case, we're going to have to then deal with that over or under applied overhead by the end of the time period. So that next month, we basically start with zero. So there's three things that can happen with an estimate. One is, you know, we can have we can be under applied, we can be over applied, or we can be right on our estimate could be perfect. That's not going to happen in real life. So we're almost always going to be under or over applied, and we'll have to compensate for that in some way. In our problem here, we see that overhead was under applied by the three hundred and eighty. We have the three hundred and eighty. Now we need to know the terminology and we also need to know what to do with this three hundred and eighty. And they're often two different things because obviously what are we going to do with this three hundred eighty at the end of the time period? We're going to make it zero, whatever it is, whether it be a debit or a credit. We're going to make it to go to zero because we need to start this process over in the next month. So although this factory overhead is kind of like a permanent account, it's kind of like part of inventory. It's it's acting like a temporary account, not because it's closing out to retained earnings, but because we're going to close it out to basically cost of goods sold. We're going to force it to go back to zero so that we're going to start all over in the next time period. And the reason we so that means that this number here, the three hundred and eighty, whether it be a debit or a credit from a journal entry standpoint, we're going to do whatever we need to do to make it go to zero. So this is a debit, so we're going to credit it three hundred and eighty. If it were a credit, we would debit it by three hundred and eighty. So from a from a practical standpoint, that's all we need to do. We need to see what's there and we need to do whatever we need to do to make it go down to zero at the end of the time period. From a book problem perspective and just from a communication perspective and knowing what's going on, we need to understand the terms under or over applied. If we look at what actually happened in factory overhead, we're going to say, OK, this is the stuff, all the debits that happened. That's the stuff that's going into factory overhead. And you can think about this by thinking about, OK, what would the debit journal entries be related to factory overhead? When would we debit factory overhead? Let's think about the journal entries. Well, one would be indirect labor. And so the indirect labor would be crediting wages payable or cash and debiting factory overhead because we didn't know which job to assign it to. And we're not expensing it because it's not part of this period's cost. It's part of the inventory. Indirect materials is going to be the same thing. We took materials out in order to make inventory. It didn't know which job to put it to. So we debited factory overhead and credited the raw materials. Any other thing that's on the factory that we paid for, such as rent on the factory or utilities in the factory, those are going to be things we're going to credit cash and we're going to debit not the expense of utilities expense and whatnot, but part of inventory, not work and process because we don't know which job to put it to, but factory overhead. So all these debits are what actually happened. And then this credit is us taking it out. If we think of that journal entry, that's us reducing the factory overhead with a credit and putting it into the work and process. It's only one journal entry here and going into just the work and process account there, but it's going to be going to multiple jobs that support this work and process account. And that's why we had to do it in this process. That's why it had to go in and out of the factory overhead in the first place. Now, as that happens, we can say, okay, well, and also note that this amount that we apply out, we did it all at one time to all the jobs at one time, like at the end of the month. It's quite possible that we do that as we go, meaning we might start the job and as we finish the job, apply out a factory overhead as we finish the job. So we may have credits in here as we go. It's not always the case in other words that we will incur all the factory overhead and then apply it out at the end of the time period. We're going to, we're going to apply it out based on our predetermined overhead rate as we go. So we want to keep that in mind. But as we look at this at the end of the time period, we can say, okay, well, these are the debits. There's the credits. There's more debits than credits because we're left with a debit balance. In other words, the debits are winning by add up all the debits and subtract out all the credits. The debits are winning by 380, meaning we had more actual costs than we applied out. And that would mean that from the, our terminology standpoint, that's going to be under applied. So we have under applied because we had more costs than we applied out. We applied out less than or under what the actual was. Now that leaves us with a debit balance.