A process cost accounting system records all actual factory overhead costs directly in the Work in Process account.

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In a process cost accounting system, factory overhead costs are not recorded directly in the Work in Process account. Instead, they are allocated to the various production departments or cost centers based on a predetermined overhead rate and then charged to the Work in Process account as the goods are worked on in each department. This method of cost accounting is used in industries where a large volume of homogeneous products are produced, such as in the food processing, chemical, and oil refining industries.

A Process Cost Accounting System Records All Actual Factory Overhead