If the predetermined overhead allocation rate is 250% of direct labor cost and the Finishing Department's direct labor cost for the reporting period is $20,000, the following entry would record the allocation of overhead to the products processed in this department:

Question

Quizplus · Accepted Answer

If the predetermined overhead allocation rate is 250% of direct labor cost and the Finishing Department's direct labor cost for the reporting period is $20,000, the overhead allocated to the department would be $50,000 (250% × $20,000). This overhead allocation would be recorded with a journal entry debiting Finished Goods Inventory or Work-in-Process Inventory, and crediting Manufacturing Overhead.

If the Predetermined Overhead Allocation Rate Is 250% of Direct