Question

LO 4.7In a job order cost system, overhead applied is debited to which account?

work in process inventory
finished goods inventory
manufacturing overhead
cost of goods sold

Answer 1

work in process inventory

Step-by-step explanation:

The journal entry to record overhead applied is shown below:

Work in progress inventory A/c Dr XXXXX

To Factory overhead A/c XXXXX

(Being applied overhead is recorded)

And, the journal entry to record over applied is presented below:

Manufacturing overhead A/c Dr XXXXX

To Cost of Goods sold A/c XXXXX

(Being over-applied overhead is recorded)

Over applied is come when actual overhead based on predetermined rate is more than the actual manufacturing overhead