The journal entry to record the application of factory overhead to work in process would include a credit to:
A)Work-in-Process.
B)Cost of Goods Sold.
C)Factory Overhead.
D)Materials Inventory.
E)Finished Goods Inventory.

Question

Quizplus · Accepted Answer

Factory overhead is an indirect cost, which includes all manufacturing costs that cannot be directly traced to the product, such as rent, utilities, and indirect labor. When factory overhead is applied to work in process, it is added as a cost to the product. Thus, the journal entry would include a debit to Work-in-Process and a credit to Factory Overhead.

The Journal Entry to Record the Application of Factory Overhead