The overhead cost applied to a job during a period is recorded with a credit to Factory Overhead and a debit to:
A) Jobs Overhead Expense.
B) Cost of Goods Sold.
C) Finished Goods Inventory.
D) Indirect Labor.
E) Goods in Process Inventory.

Question

Quizplus · Accepted Answer

The overhead cost applied to a job during a period is added to the Goods in Process Inventory account, which represents the cost of unfinished products. Therefore, the debit entry should be made to the Goods in Process Inventory account. Choice A (Jobs Overhead Expense) and D (Indirect Labor) are not correct because they are not specific accounts, and choices B (Cost of Goods Sold) and C (Finished Goods Inventory) are not correct because the overhead cost is not applied to them during the period.

The Overhead Cost Applied to a Job During a Period