Question

Piekos Corporation incurred $90,000 of actual Manufacturing Overhead costs during June. During the same period, the Manufacturing Overhead applied to Work in Process was $92,000. The journal entry to record the application of Manufacturing Overhead to Work in Process would include a:

A) debit to Manufacturing Overhead of $92,000
B) debit to Work in Process of $90,000
C) credit to Manufacturing Overhead of $92,000
D) credit to Work in Process of $90,000

Answer 1

Option (C), The journal entry to record the application of Manufacturing Overhead to Work in Process would include a credit to Manufacturing Overhead of $92,000. This entry reduces the Manufacturing Overhead balance and allocates costs to Work in Process.

Step-by-step explanation:

The correct answer to the question is C) credit to Manufacturing Overhead of $92,000. When applying manufacturing overhead to Work in Process, the journal entry would include a debit to the Work in Process account and a credit to the Manufacturing Overhead account. The debit reflects the allocation of costs to the Work in Process for products that are in production, while the credit reduces the Manufacturing Overhead account by the amount that was applied.

Additionally, since you mentioned a self-check question on a firm's accounting profit, we can calculate it as follows: With sales revenue of $1 million and expenses totaling $950,000 ($600,000 on labor, $150,000 on capital, and $200,000 on materials), the firm's accounting profit would be the difference, which is $50,000 ($1,000,000 - $950,000).