Final answer:
The statement is false; the difference between actual and applied manufacturing overhead costs, known as overhead variance, is typically adjusted in the WIP, Finished Goods, or Cost of Goods Sold accounts, not just the WIP account.
Step-by-step explanation:
The statement that the entire difference between the actual manufacturing overhead cost for a period and the applied manufacturing overhead cost is typically close to the Work Process account is false.
The difference between actual and applied manufacturing overhead costs does not necessarily show up close to the Work In Process (WIP) account. Instead, this difference is known as manufacturing overhead variance.
If the applied manufacturing overhead is less than the actual overhead incurred, this results in an overhead variance showing under-applied overhead, which must be resolved at the end of the accounting period.
Conversely, if the applied overhead exceeds the actual overhead incurred, there is an over-applied overhead variance. These variances are then typically adjusted for in the Work In Process account, Finished Goods account, or Cost of Goods Sold, depending on the company's accounting policies.
The origin of cost figures in production analysis often arises from the production function and the factor payments. These costs vary according to changes in the cost of labor (wages) and the cost of capital (machines), as illustrated in examples that showcase different technologies as low-cost production technologies depending on the relative costs of wages and machines.