COST ACCOUNTING
MANUFACTURING OVERHEAD
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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debit Work in Process Inventory, credit Cost of Goods Sold.
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debit Work in Process Inventory, credit Raw Materials Inventory.
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debit Work in Process Inventory, credit Factory Overhead.
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debit Factory Overhead, credit Raw Materials Inventory.
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Detailed explanation-1: -Correct Answer: Option e. debit Work in Process Inventory, credit Raw Materials Inventory.
Detailed explanation-2: -A company that uses a job order costing system would make the following entry to record the flow of direct materials into production: debit Work in Process Inventory, credit Raw Materials Inventory.
Detailed explanation-3: -Examples of companies that use job costing systems include Boeing (airplanes), Lockheed Martin (advanced technology systems), and Deloitte & Touche (accounting).
Detailed explanation-4: -Answer and Explanation: The correct answer is c. debit Cost of Goods Sold, credit Finished Goods Inventory, debit Accounts Receivable & Credit Sales.
Detailed explanation-5: -Explanation: Direct labor costs incurred in production should be recorded as an increase to the inventory account called work-in-process and an increase to the liability account called accounts payable.