In a job-order costing system,the amount of overhead cost that has been applied to a job that remains incomplete at the end of a period is:
A) deducted on the Income Statement as overapplied overhead.
B) closed to Cost of Goods Sold.
C) transferred to Finished Goods at the end of the period.
D) part of the ending balance of the Work in Process inventory account.

Question

Quizplus · Accepted Answer

In a job-order costing system, overhead costs are applied to jobs based on a predetermined overhead rate. Any overhead cost that has been applied but remains unallocated at the end of the period is part of the ending balance of the Work in Process inventory account for that job. This is because the overhead cost is considered a part of the total cost of the job while it is still in progress. Once the job is completed, the total cost (including overhead) is transferred to Finished Goods. Therefore, choice D is the correct answer.

In a Job-Order Costing System,the Amount of Overhead Cost That