Myrna's Manufacturing calculated its predetermined overhead rate to be 200% of direct materials costs.For the month of July, the company incurred $120,000 of raw material costs, of which $90,000 were direct materials, and $30,000 were indirect materials.Actual overhead incurred was $175,000.What would be the debit entry to the Work in Process Inventory account for July with respect to manufacturing overheat?

Question

Quizplus · Accepted Answer

The predetermined overhead rate is 200% of $90,000 (direct materials costs) which is $180,000. Therefore, the total manufacturing overhead applied to the Work in Process Inventory for July is $180,000.
Since the actual overhead incurred was $175,000, the Work in Process Inventory account should be debited for this amount to reflect the actual overhead incurred. Therefore, the debit entry to the Work in Process Inventory account for July with respect to manufacturing overheat is $175,000.

Myrna's Manufacturing Calculated Its Predetermined Overhead Rate to Be 200