In a process costing system, when manufacturing overhead costs are applied to the cost of production, they are debited to:
A) the Manufacturing Overhead account.
B) the Finished Goods Inventory account.
C) the Raw Materials Inventory account.
D) the Cost of Goods Sold account.
E) the Work in Process Inventory account.

Question

Quizplus · Accepted Answer

When manufacturing overhead costs are applied to the cost of production, they are debited to the Work in Process Inventory account. This is because manufacturing overhead costs are associated with the production process and therefore impact the cost of each unit of product as it moves through the production process. The Work in Process Inventory account represents the cost of products that are currently being produced, making it the appropriate account to debit for the application of manufacturing overhead costs.

In a Process Costing System, When Manufacturing Overhead Costs Are