Dentlinger Company uses a job-order cost system and had the following data available for 20X2.

-The journal entry to record the factory overhead costs incurred would include a
A) debit to Factory Department Overhead Control for $292,000.
B) credit to Factory Department Overhead Control for $286,000.
C) debit to WIP Inventory for $292,000.
D) credit to WIP Inventory for $286,000.

Question

Dentlinger Company uses a job-order cost system and had the following data available for 20X2.
 
-The journal entry to record the factory overhead costs incurred would include a
A) debit to Factory Department Overhead Control for $292,000. 
B) credit to Factory Department Overhead Control for $286,000. 
C) debit to WIP Inventory for $292,000. 
D) credit to WIP Inventory for $286,000.

Quizplus · Accepted Answer

In a job-order cost system, all manufacturing costs are assigned to jobs on a specific basis. Factory overhead costs are applied to jobs using a predetermined overhead rate based on estimated annual overhead costs and estimated annual activity levels (such as direct labor hours or machine hours).

Since Dentlinger Company incurred actual overhead costs of $292,000 in 20X2, the journal entry to record the factory overhead costs incurred would be:

Debit Factory Department Overhead Control      $292,000
     Credit Cash (or Accounts Payable)                $292,000

This entry records the actual overhead costs incurred and will be used to adjust the balance in the Factory Department Overhead Control account.

Therefore, the best choice is A) debit to Factory Department Overhead Control for $292,000.

Dentlinger Company Uses a Job-Order Cost System and Had the Following