The journal entry to apply overhead to production includes a credit to Manufacturing Overhead control and a debit to

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Overhead is applied to the products being produced during the period, thus it increases the cost of Work in Process Inventory. Manufacturing Overhead is credited to acknowledge the increase in costs. Finished Goods Inventory and Cost of Goods Sold are affected once the finished products are sold, and Raw Material Inventory is not affected by the application of overhead.

The Journal Entry to Apply Overhead to Production Includes a Credit