An accountant recently debited Work-in-Process Inventory and credited Manufacturing Overhead. 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 an accountant debits Work-in-Process Inventory and credits Manufacturing Overhead, it means they have applied a predetermined overhead amount to production. This is done to allocate overhead costs to the inventory produced.

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