Question

Overhead costs are debited to work in process when ______.

1) The job is sold
2) The job is started
3) They are applied to jobs
4) The actual costs are incurred

Answer 1

Overhead costs are debited to work in process when they are applied to jobs, using a predetermined overhead rate during the accounting period, not when the job is sold, started, or when actual costs are incurred.

Step-by-step explanation:

Overhead costs are debited to work in process when they are applied to jobs. This typically occurs when overhead is allocated to specific jobs based on a predetermined overhead rate. It does not happen when the job is sold, when the job is started, nor when the actual costs are incurred. Instead, it happens as a part of the job costing process, where each job is charged with its share of factory overhead using an estimated rate during the accounting period.