Question

If the predetermined overhead allocation rate is 250% of direct labor cost and the Finishing Department's direct labor cost for the reporting period is $20,000, the following entry would record the allocation of overhead to the products processed in this department:

Work in Process Inventory, Finishing Dept 50,000 Factory Overhead 50,000
a) True
b) False

Answer 1

a) True

Step-by-step explanation:

The following entry would be recorded to allocate the overhead to the products processed

Date Account&Explanation Debit Credit

Work in progress, Finishing department $50,000

($20,000 * 250%)

Factory Overhead $50,000

(To allocate the overhead)

Step-by-step explanation: Work in process account would be debited to accumulate the manufacturing overhead to the cost of the product

And, factory overhead would be credited to charge such expenses to the product

Conclusion: The given journal entry is correct.