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:

Question

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The allocation of overhead to the Finishing Department's products would be 250% of $20,000, which is $50,000. The entry to record this allocation would be a debit to Finished Goods Inventory and a credit to Manufacturing Overhead.

If the Predetermined Overhead Allocation Rate Is 250% of Direct