The Coffee Cafe manufactures premium roast coffee. Daquesha, the company accountant, is preparing the month end financial statement and reports for the company. The Coffee Cafe records applied (estimated) overhead to Job Cost Sheets as a percentage of Direct Labor Costs. The rate that the Coffee Cafe uses is 70% and the direct labor costs from the Job Cost Sheets for the month of June totaled $205, 000. Actual factory overhead was $145, 000. What is the journal entry to record the applied factory overhead?

INTRODUCTION TO COST ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	Debit Work in Process for $145, 000 and Credit Factory Overhead for $145, 000
B	Debit Factory Overhead for $145, 000 and Credit Work in Process for $145, 000.
C	Debit Work in Process for $143, 500 and Credit Factory Overhead for $143, 500
D	Debit Factory Overhead for $143, 500 and Credit Work in Process for $143, 500

Explanation:

Detailed explanation-1: -A cost sheet is a statement that shows the various components of total cost for a product and shows previous data for comparison. You can deduce the ideal selling price of a product based on the cost sheet. A cost sheet document can be prepared either by using historical cost or by referring to estimated costs.

Detailed explanation-2: -Accurate cost accounting helps manufacturers set pricing policies. Knowing your costs is a crucial part of determining sales prices. Many manufacturers strive to maximize their profit, while selling their goods at a fair price to their customers.

Detailed explanation-3: -A cost sheet primarily helps you get an accurate account of all costs associated with manufacturing a product or providing a service at every stage of operation. These sheets can help you determine the total overall cost and the cost per unit of a product.

Detailed explanation-4: -Origins of Cost Accounting Modern cost accounting originated during the industrial revolution when the complexities of running large scale businesses led to the development of systems for recording and tracking costs to help business owners and managers make decisions.

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