ECONOMICS

COST ACCOUNTING

MANUFACTURING OVERHEAD

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Which element will be credited in the manufacturing overhead cost account?
A
predetermined overhead rate
B
actual manufacturing overhead cost
C
budgeted manufacturing overhead cost
D
applied manufacturing overhead cost
Explanation: 

Detailed explanation-1: -Manufacturing overhead is divided into five distinct groups: indirect labor; indirect materials, supplies, and repair parts; rent and utilities; depreciation; financial costs.

Detailed explanation-2: -The overhead account is debited for the actual overhead costs as incurred. The overhead account is credited for the overhead costs applied to production in the work-in-process account.

Detailed explanation-3: -What is Applied Manufacturing Overhead? Applied manufacturing overhead signifies manufacturing overhead expenses that have been applied to units of a product during a specific period. The predetermined overhead rate is typically calculated using direct labor hours as a basis.

Detailed explanation-4: -Applied overhead costs include any cost that cannot be directly assigned to a cost object, such as rent, administrative staff compensation, and insurance. A cost object is an item for which a cost is compiled, such as a product, product line, distribution channel, subsidiary, process, geographic region, or customer.

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