Price Company assigns overhead based on machine hours. The Milling Department logs 2400 machine hours and Cutting Department shows 4000 machine hours for the period. If the overhead rate is $5 per machine hour the entry to assign overhead will show a
A) debit to Manufacturing Overhead for $32000.
B) credit to Work in Process-Cutting Department for $20000.
C) debit to Work in Process for $20000.
D) credit to Manufacturing Overhead for $32000.

Question

Quizplus · Accepted Answer

The total overhead assigned is calculated by multiplying the total machine hours (2400 + 4000 = 6400) by the overhead rate ($5), resulting in $32,000. The entry to assign overhead will credit Manufacturing Overhead for $32,000.

Price Company Assigns Overhead Based on Machine Hours