Question

Job order cost accumulation MOH units of OH driver expended x application rate = 900 machine hours on job 1015 X $35 per hour = 31,500. What is the journal entry?

Option 1: Debit Manufacturing Overhead, Credit Cash
Option 2: Debit Work in Process, Credit Manufacturing Overhead
Option 3: Debit Work in Process, Credit Cash
Option 4: Debit Manufacturing Overhead, Credit Accounts Payable

Answer 1

the correct option is Option 2: Debit Work in Process, Credit Manufacturing Overhead.

Step-by-step explanation:

The journal entry for the given scenario is:

Debit Work in Process, Credit Manufacturing Overhead

This journal entry is made because expenses incurred in the production process, represented by the machine hours on job 1015 multiplied by the application rate of $35 per hour, are recorded as an increase in the Work in Process account.

At the same time, the Manufacturing Overhead account is credited to reflect the accumulation of indirect manufacturing costs. The journal entry does not involve Cash or Accounts Payable, hence option 2 is the correct answer.