Hsu Company incurred $90,000 of depreciation for the year.Eighty percent relates to the ﬁrm's production facilities, and 20% relates to sales and administrative oﬃces.If all items are handled in the proper manner, a review of the company's accounting records should reveal a:
A)debit to Depreciation Expense for $90,000.
B)debit to Manufacturing Overhead for $90,000.
C)debit to Manufacturing Overhead for $72,000.
D)debit to Work-in-Process Inventory for $18,000.
E)credit to Cash for $90,000.

Question

Quizplus · Accepted Answer

The depreciation related to production facilities will be charged to manufacturing overhead, whereas the depreciation related to sales and administrative offices will be charged to selling and administrative expenses.

80% of $90,000 = $72,000 will be charged to manufacturing overhead.

20% of $90,000 = $18,000 will be charged to selling and administrative expenses.

Therefore, the correct option is C) debit to Manufacturing Overhead for $72,000.

Hsu Company Incurred $90,000 of Depreciation for the Year