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:
$\begin{array}{llr}
\text {Work in Process Inventory, Finishing Dept. } &50,000\
\text { Factory Overhead } &&50,000\
\end{array}$

Question

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:
$\begin{array}{llr}
  \text {Work in Process Inventory, Finishing Dept.  } &50,000\
 \text { Factory Overhead } &&50,000\
\end{array}$

Quizplus · Accepted Answer

The entry to record the allocation of overhead to the products processed in the Finishing Department would be:

Debit: Work in Process Inventory, Finishing Dept. $50,000
Credit: Factory Overhead $50,000

This is calculated as 250% of the direct labor cost of $20,000, which gives an overhead allocation of $50,000.