We use estimates in computing a predetermined overhead rate when determining how to allocate overhead. Because of this, there are differences between the what we applied to cost objects versus what the total overhead costs actually are for the period. This results in manufacturing overhead being over or under-applied. When manufacturing overhead is under-applied: (Select all that apply)

1) the amount of overhead assigned to the cost objects for the period is less than the actual manufacturing overhead that is incurred.

2) the amount of overhead assigned to the cost objects for the period is more than the actual manufacturing overhead that is incurred.

3) Cost of goods sold will be increased to adjust for this difference.

4) Cost of goods sold will be decreased to adjust for this difference.