Manufacturing overhead is allocated by debiting the Finished Goods Inventory account.

Question

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Manufacturing overhead is allocated by debiting the Manufacturing Overhead account and then allocating the total overhead cost to the appropriate cost objects, such as products or jobs, through predetermined overhead rates or actual overhead incurred. The finished goods inventory account is only credited (not debited) when finished goods are transferred out of production and into inventory.

Manufacturing Overhead Is Allocated by Debiting the Finished Goods Inventory