Michael Paints used a predetermined overhead allocation rate to allocate $75,000 and $65,000 of indirect costs to Coloring Department and Mixing Department, respectively. The journal entry to record the allocation of overhead costs to the Coloring Department is:
A)debit Manufacturing Overhead, $75,000; credit Work-in-Process Inventory-Mixing, $75,000.
B)debit Work-in-Process Inventory-Coloring, $75,000; credit Manufacturing Overhead, $75,000.
C)debit Work-in-Process Inventory-Coloring, $65,000; credit Manufacturing Overhead, $65,000.
D)debit Manufacturing Overhead, $65,000; credit Work-in-Process Inventory-Mixing, $65,000.

Question

Quizplus · Accepted Answer

The journal entry to record the allocation of overhead costs to a department includes debiting the Work-in-Process Inventory account for that department and crediting the Manufacturing Overhead account for the total amount of overhead costs allocated. In this case, $75,000 of overhead costs were allocated to the Coloring Department, so the entry would be to debit Work-in-Process Inventory-Coloring for $75,000 and credit Manufacturing Overhead for $75,000.

Michael Paints Used a Predetermined Overhead Allocation Rate to Allocate