An accountant recently debited Work-in-Process Inventory and credited Manufacturing Overhead at a company that uses normal costing.The accountant was:
A)applying a predetermined overhead amount to production.
B)recognizing receipt of the factory utilities bill.
C)recording a year-end adjustment for an insigniﬁcant amount of underapplied overhead.
D)recognizing actual overhead incurred during the period.
E)recognizing the completion of production.

Question

Quizplus · Accepted Answer

When a company uses normal costing, overhead costs are applied to production using a predetermined overhead rate. This means that the accountant must debit Work-in-Process Inventory and credit Manufacturing Overhead to account for the overhead costs that are being applied to the products being produced.

An Accountant Recently Debited Work-In-Process Inventory and Credited Manufacturing Overhead