The entry to apply factory overhead to work in process ending inventory includes a debit to Work in Process Inventory and a credit to Factory Overhead.

Question

Quizplus · Accepted Answer

This entry is correct according to generally accepted accounting principles (GAAP). Factory overhead is applied to the Work in Process Inventory using a predetermined overhead rate or actual overhead costs. The debit to Work in Process Inventory is an increase in the inventory account, while the credit to Factory Overhead reduces the balance of the overhead account.

The Entry to Apply Factory Overhead to Work in Process