ECONOMICS

Detailed explanation-1: -It is added to the cost of the final product along with the direct material and direct labor costs. Usually manufacturing overhead costs include depreciation of equipment, salary and wages paid to factory personnel and electricity used to operate the equipment.

Detailed explanation-2: -Both job and process cost systems use predetermined overhead rates to apply overhead.

Detailed explanation-3: -Predetermined overhead rates are computed by dividing the estimated cost by the estimated cost driver. This is used to compute for the standard overhead cost to be applied as product cost.

Detailed explanation-4: -The answer is D. If overhead costs is applied or assigned to the production, the applied overhead cost will be reduced from overhead cost and transferred to work in process inventory. So, the entry will be a debit to Work in process inventory and a credit to Manufacturing account.