The journal entry to record the application of overhead costs to production includes:
A)a credit to Manufacturing Overhead.
B)a credit to Work in Process Inventory.
C)a credit to Finished Goods Inventory.
D)a credit to Cost of Goods Sold.

Question

Quizplus · Accepted Answer

A credit to Manufacturing Overhead is correct because when overhead costs are applied to production, the Manufacturing Overhead account is credited to reduce the balance of the overhead costs that have been incurred. This entry reflects the allocation of overhead costs to the products being manufactured, which is recorded with a debit to Work in Process Inventory and a credit to Manufacturing Overhead.

The Journal Entry to Record the Application of Overhead Costs