Question

n Crawford Company, the predetermined overhead rate is 80% of direct labor cost. During the month, $210,000 of factory labor costs are incurred, of which $180,000 is direct labor and $30,000 is indirect labor. Actual overhead incurred was $200,000. The amount of overhead debited to Work in Process Inventory should be:

Answer 1

WIP 144,000 debit

Factory Overhead 144,000 credit

Step-by-step explanation:

210,000 labor cost

30,000 indirect labor

180,000 direct labor

The rate is based on direct labor cost, so we use this figure.

180,000 x 80% = 144,000

Remember, the rate is calculate using a given cost driver. So it only this cost driver matters.